A second explanation for this paradox focuses on what might be more persistent, structural differences between developing and industrial economies.
The financial systems in many developing nations are relatively weak and are not effective at directing saving toward appropriate investment projects.
Thus, excess saving floes to countries with better financial systems.
Compared with developing economies, industrial countries such as the United States are believed to produce financial assets they are safer, less volatile, and more liquid—although the U.S. financial crisis of 2008-2009 may have raised questions about that reputation. These are advantages, that also draw capital out of developing economies. This explanation also suggests that the uphill flow of capital will be reversed to the extent that the financial systems of developing countries improve. However, such a process is likely to take time.