Abstract

Word growth is moderating, and financial markets are signaling a turn in the financing conditions facing the developing world .as these developments make themselves felt ,2007 is likely to be a year of adjustment for capital flows to developing countries .
After recovering from the sharp contraction of 2001-2oo2 ,private flows weathered several episodes of global financial volatility and passed through a full cycle of global monetary easing and tightening to reach a record level of $ 647 billion in 2006 ,up 17 % from 2005.total capital flows, including lending by official creditors, leveled off at 5 % of gross domestic product GDP in 2005-2006 ,just below the 5.25 % level reached in 1995-1997,before the East Asian crisis.
Developing countries have come to account for a large share of growth of world output and trade ,a fact that is increasingly recognized by international investors .their economies grew more than 7% in 2006 –more than twice the 3 % rate of growth in high- income countries .the expansion was particularly evident in China , where output increased 10.7 % ,and India ,which grew 9.2 % .but the strong performance was broadly based ,with all developing regions growing at least 5 % .even oil –importing countries recorded robust growth of almost 5%,despite high oil prices for the third consecutive year .