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International capital flows

Policy responses to the global financial crisis

Policy advice for different aspects of the global financial crisis

Authors: N. McCulloch; A. Schmidt; A. Sumner
Publisher: Institute of Development Studies, Sussex, UK, 2009

Full text of document

This document comprises of a set of briefs which discuss policy responses to the financial crisis. They came out of rapid research projects from the UK Institute of Development Studies for publication to coincide with the London G20 summit in April 2009.

The ten short papers are outlined below:

  • The global financial crisis, developing countries and policy responses: This brief summarises the conclusions from the research projects. Recommendations include investment in early warning systems, seizing opportunities to strengthen social protection systems and support for vulnerable businesses in rural areas

 

  • What are the likely poverty impacts of the current crises?: This brief looks at evidence from previous financial crises for lessons on poverty impact in the current crisis

 

  • Voices of the poor in the current crises: A report on field research in poor rural and urban communities in developing countries show how the crisis is beginning to be felt

 

  • Social protection responses to the financial crisis: what do we know?: Notes how social protection can respond and suggests the opportunity to develop long-term programmes through global partnership

 

  • Macroeconomic policy, stimuli, aid, and budgeting: what options?: This briefing discusses the differing ability of developing countries to respond to the crisis. Governments need to use a range of economic and financial policy instruments to combat the downturn and the availability of external resources is critical

 

  • China and the global financial crisis: implications for low-income countries: How China is affected will be noticed in other low-income economies whose recent growth has in part been stimulated by Chinese demand

 

  • The impact on developing countries of an OECD recession: This brief discusses the two major channels through which developing countries are affected. One is the Changes in international trade flows and world prices. The other, movements in global capital flows and foreign investment away from developing countries

 

  • Trade credit: This brief discusses this major problem for new exporters and small cooperatives in sub-Saharan Africa and for horticulture exporters in Latin America

 

  • From crisis management to institutional reform: This brief outlines the importance of understanding the diverging understandings of the crisis and their likely influence on options for reshaping global economic governance

 

  • Will the global financial crisis change the development paradigm?: This final brief explores changes in the way that policymakers think about development policy as a result of this unique and severe global crisis