Although the 1980s was a decade of enormous activity in international financial markets, little of this activity translated into net resource transfers from capital-rich to capital-scarce countries. Indeed, as a result of the debt crisis resource transfers generally went from South to North. As the 1990s begin, however, the prospects for substantial external finance for development seems brighter, at least in some areas. In Europe, Portugal and Spain have recently attracted substantial inflows of external capital; it is widely believed, although some are sceptical, that reforming Eastern European nations may also be able to attract considerable external finance. In North America, Mexican economic reforms and the prospect of a free trade agreement have enabled that nation to resume voluntary access to the world capital market, with large inflows of direct investment in particular. In both the European and North American context, capital inflows have been widely seen both as a vote of confidence in the future economic growth of the recipients and as a key force propelling those growth prospects.

Some observers (e.g. Hale, 1991) have gone further and suggested that with the victory of the West in the Cold War, the stage is now set for a second golden age of capitalism. In this new golden age, the optimists suggest, international net capital flows may again rise to levels as a share of world product comparable to those in the pre- World War I era, and a worldwide convergence of per capita income will be the result.