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New York, New York, Oxford University Press, 1985. 243 p.This report focuses on the contribution that international capital makes to economic development. While paying close attention to the events of the recent past, it also places the use of foreign capital in a broader and longer-term perspective. Using this perspective, the Report shows how countries at different stages of development have used external finance productively; how the institutional and policy environment affects the volume and composition of financial flows to developing countries; and how the international community has dealt with financial crises. A recurring theme of the Report is that countries in debt-servicing difficulties are not necessarily those with the largest debts or those that have suffered the biggest external shocks. The Report stresses that international flows of capital can promote global economic efficiency and can allow deficit countries to strike the right balance between reducing their deficits and financing them. A historical perspective on the role of international finance in economic development is presented, followed by an assessment of policies of industrial economies from the perspective of developing countries. The importance of developing countries' policies in deriving benefits from foreign capital is considered. Issues in managing capital flows are presented. The Report then discusses the main mechanisms through which foreign capital flows to developing countries. An overview of the international financial system and its relations with developing countries are presented. Issues in official development finance are examined. The evolving relationship between the developing countries and international capital markets is outlined. Possibilities for a bigger role for direct and portfolio investment in developing countries are examined. The Report concludes that the developing countries will have a continuing need for external finance. It demonstrates that many of the policies required to attract external finance and promote economic growth are either being implemented or planned already. A prosperous and stable world can become a reality if each country follows the route outlined.