DOES THE REVIVAL OF INTERNATIONAL PRIVATE CAPITAL FLOWS MEAN THE END OF AID - AN ANALYSIS OF DEVELOPING-COUNTRIES ACCESS TO PRIVATE CAPITAL

Despite the collapse of private flows in the years following the debt crisis, since 1987 international flows of private capital have been in creasing at a remarkable rate. Some argue that these trends spell ''th e end of aid'' as private capital will take its place. But flows of pr ivate capital have been highly concentrated in a small number of count ries, with African countries in particular having apparently little ac cess. This paper presents an analysis of the determinants of private c apital flows with a data set covering many low income and highly indeb ted countries. The results suggest that such countries have a low prob ability of being able to gain access to sizeable quantities of private capital so that aid remains necessary to finance their requirement fo r external finance. (C) 1998 Elsevier Science Ltd. All rights reserved .