Some regions rely almost entirely on aid for their external finance. Private capital flows can add much to what countries put into their development efforts. But these flows are concentrated in fewer than 20 developing countries, and some types of these flows, such as bonds and bank lending, can be volatile, as witness the Asian crisis of the late 1990s. Countries need to create the conditions that attract longer-term investments from overseas as well as locally. Countries like Mozambique and Uganda are beginning to do just that, by providing a stable political and economic environment and a welcoming and transparent regulatory environment.
External aid plays an important part in supporting development, especially in poor countries.
Worse, the inclination to help developing countries declined in the 1990s. Donors need to provide more aid to poor countries. Accelerated debt relief is also critical if the poverty goals are to be met. And they should finance programmes that will benefit many countries at once, such as research on vaccines for tropical diseases. There is a consensus that any strategy aiming at poverty reduction has to be multifaceted.