Part 3-II Section Outline

International Capital Markets & Their Importance

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1. What Are Capital Markets?
   1. Capital Markets Efficiently Direct Capital to Productive Uses.
   2. Finance can be Direct or Indirect.
   3. Capital Markets are Important Because they Promote Efficiency and Productive Investments.
2. The Structure of Capital Markets
   1. Many Types of Securities are Sold in Primary and Secondary Capital Markets.
3. Internationalization of Capital Markets in the Late 1990s
   1. The International Capital Market of the Late 1990s was Composed of a Number of Closely Integrated Markets with an International Dimension.
   2. The Need to Reduce Risk Through Portfolio Diversification Explains in Part the Importance of the International Capital Market During the Late 1990s.
   3. The Principal Actors in the International Capital Markets of the Late 1990s were Banks, Non-Bank Financial Institutions, Corporations, and Government Agencies.
   4. Changes in the International Marketplace Resulted in a New Era of Global Capital Markets During the Late 1990s, which were Critical to Development.
4. Sources of Capital
   1. Private Sources of Capital.
      1. Foreign direct investment.
      2. Portfolio investment: debt flows and equity flows.
   2. Public Sources of Capital.
   1. Official non-concessional loans: multilateral and bilateral aid
   2. ODA: official grants and concessional loans
   3. Private Capital Became Very Important to Development in the Late 1990s.

[Part Three Bibliography]

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