It has been widely documented that US investors’ net purchases in a foreign equity market co-move positively with returns there. This comovement has been labelled “return chasing”: US investors tend to be net buyers of equity in a foreign country when stock prices there are rising. A common explanation for return chasing is based on the assumption that US investors lack the private information of local investors in foreign markets. In the presence of local private information, less informed US investors react more strongly to public signals than better informed local investors, even if all investors have rational expectations. If public signals are sufficiently important drivers of returns, this mechanism generates both return chasing and under performance of US investors in foreign markets.
While the private information view of international equity markets helps explain return chasing and also equity home bias, it has been challenged by recent empirical findings on investor performance. If local private information were important, domestic investors should make higher trading profits than foreign investors. However, the evidence on the performance of foreign and local investors is mixed, with a number of studies suggesting that foreign investors outperform their domestic counterparts.2 In light of models with local private information, it is puzzling why foreigners should sometimes have country-specific private information that is not available to local investors.
HIV/AIDS is now recognized as the greatest challenge to the development community today, rolling back decades of development progress. It is affecting family welfare, economic growth, and social services. Family incomes have been reduced, as HIV-infected adults are usually too sick to work to provide for themselves and their families. At their death, high burial costs add to the loss of income. The twin enemies of HIV/AIDS and poverty stand to grossly undermine efforts made towards sustainable development in sub-Saharan countries for many years to come.
At the PVO-USAID Steering Committee on Multisectoral Approaches to HIV/AIDS held 16-17 October 2002 in Washington DC, Mr. Stephen Lewis, Special Envoy of the UN Secretary General for HIV/AIDS made the following statement: “Currently six countries in southern Africa are facing starvation induced by lack of rainfall and drought. While HIV/AIDS is not causing the famine, it certainly exacerbates it, especially since HIV/AIDS has ravaged the agricultural sector. It is impossible to talk about agriculture without addressing HIV/AIDS.”
This paper touches upon three distinct yet interrelated areas, namely: (1) External borrowing and the development process; (2) Current developments in international finance and implications for Nigeria; and (3) Multilateral sources of funding and the role of the major International Financial Organisations: the example of the World Bank. Each of these areas will be treated one by one below.
The process of indebtedness is supposed to be undertaken primarily in favour of development of the borrowing country. So what exactly is development? I shall not try to compare various theoretical definition and at the same time emphasize two major aspects of the development process.
