The developing country experience with capital flows has been characterised by
cycles of booms and busts. After more than two decades of limited capital flows,
capital flows to developing countries surged in the 1970s. With the onset of the
debt crisis in 1982, capital inflows to developing countries declined dramatically
and remained small during most of the 1980s. This trend was reversed in the
late 1980s, and capital flows to Asia and Latin America increased substantially in
the first half of the 1990s. The setback from the 1994 Mexican crisis was relatively
short-lived, with capital flows to emerging markets, including Mexico, resuming
soon after the crisis. Capital flows, especially to Asia, slowed down considerably
in the wake of the Asian crisis in 1997. Capital flows to developing countries
remained subdued in the second half of the 1990s, reflecting the effects of the
Asian crisis as well as the Russian and Brazilian crises of 1998 and 1999.