Seminar: Africa and the Perversities of International Capital Flows

During the 1980s and 1990s many African countries embraced financial globalization on the promise of accessing flows from developed countries. They removed restrictions on capital accounts, opened up to FDI, privatized state assets often selling off banks to foreign owners and built stock markets. Perversely, capital flowed to the rich developed countries from some of the poorest African countries. Among other things, countries like Nigeria parked billions of dollars of reserves on Wall Street, foreign-owned domestic banks augmented their assets abroad, and stock markets were used as vehicles of capital export. And net lending from international banks also frequently turned negative. Funds generated from FDI have seldom been reinvested with profits rapidly exported out of the country. This seminar will not only document and criticize this impact but draw on institutional economic tools to try to explain the outcome and generate an alternative framework for improved financial-development linkages.

Howard Stein is a Professor in the Department of Afroamerican and African Studies at the University of Michigan and also teaches in the Department of Epidemiology. He is a development economist educated in Canada, the US and the UK. His most recent books are Beyond the World Bank Agenda: An Institutional Approach to Development (University of Chicago Press, 2008), Good Growth and Governance in Africa: Rethinking Development Strategies (Oxford University Press, ,2012) co-edited with Joseph Stiglitz, Akbar Noman & Kwesi Botchway, and Gendered Insecurities, Health, and Development in Africa (Routledge, in press) co-edited with Amal Fadlalla.