But any initial big push needs to be accompanied by policies which recognise the need for market-based incentives, as well as a greater role for the state and institution building, it said. During the 1990s, nearly 40 percent of net capital inflows into the region were transferred back to creditor countries in interest payments and profit remittances. It suggests if GDP growth could be raised to about six percent a year and kept at that rate for 10-12 years through a large amount of official aid and domestic policies, official financing would gradually be less needed, as alternative sources of financing came forward. But the report states that most countries have failed to attract foreign direct investment which has been concentrated in a handful of oil and mineral-rich countries. Despite being limited in volume, official inflows, including official development grants, multilateral and bilateral lending have made up a rising proportion of total capital inflows due to even sharper declines in private capital.
Capital inflows vary greatly among countries.
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