The global financial crisis that emerged in the financial sector in developed countries has spread to the real sector in both developed and developing countries. ODI’s Investment and Growth Programme has conducted research on the global financial crisis since October 2008, highlighted in ODI on... the Global Financial Crisis.

The UK Department for International Development, the Dutch Ministry of Foreign Affairs and the Swedish International Development Cooperation Agency has supported a team of 10 ODI researchers and 30 developing country researchers in ten poor countries (in Asia: Indonesia, Cambodia and Bangladesh, in South America Bolivia and in Africa: Benin, Ghana, Kenya, Nigeria, Uganda and Zambia) to examine the effects of the global financial crisis.  The project was staged in two phases.

In Phase 1 the main research questions included:

• What are the elements in the shock at national level (via private capital flows, trade, aid and remittances)
• What are the possible effects on growth, investment, poverty and inequality and debt (distinguish between actual and likely effects)
• What are the possible policy implications (distinguish between actual, possible and optimal policy responses)

The research involved a workshop in London on 11 February 2009, consultations in each country, and synthesis reviews.

Phase 2 used the methoodolgy developed in Phase 1 to:

·       Update information on the effects of the global financial crisis, by examining the following transmission belts:

o   Private financial flows (splitting out portfolio flows, foreign direct investment (FDI) and international bank lending);

o   Trade (imports and exports);

o   Remittances; and

o   Aid.

·      Update information on economic (growth) and social (employment and poverty) effects.

·      Monitor policy responses.

·      Deepen the existing analysis where feasible, e.g. on effects on special groups or industries.

·      Discuss country-specific issues.