So report Emine Boz, Luis Cubeddu, and Maurice Obstfeld of the IMF —the net financial outflow from emerging markets that characterized the pre-crisis global economy is no more. Capital isn’t exactly flowing downhill, e.g. from rich, advanced economies to poorer emerging economies. The aggregate current account of the emerging world is close to balance.
But the basic flow of funds is not from one set of advanced economies (Europe, Japan, the Asian NIEs) to another set of advanced economies (U.S., UK, Canada, Australia). It is no longer uphill.
In my view, there is both more and less than meets the eye here.
Less, because Asia’s surplus hasn’t actually changed much from the pre-crisis period. China’s surplus is a bit smaller after its 2016 stimulus. But the surplus of the NIEs is bigger than it was before the crisis (I do not quite understand how the NIEs can be considered advanced economies for discussions of the global flow of funds but be judged against the reserve adequacy standards for emerging economies—but that is a topic for another time). Japan’s surplus is back to roughly it pre-crisis level — and the rise in Japan’s surplus in 2016 has partially offset the fall in China’s surplus. The split within East Asia between “emerging” and “advanced” is a bit arbitrary. All the major east Asian economies are importers of resources and exporters of manufactures.
Emerging Asia is still in aggregate an exporter of savings to the world. Especially if India and others in South Asia are excluded, or if the NIEs are included.
More, because the relatively constant surplus in emerging Asia means there has been a giant swing in the aggregate current account balance of the commodity exporters. One proxy is the aggregate current account balance of the former Soviet Union, Latin America, the Middle East, and Africa. These regions of the world ran a surplus of $300-400 billion before the global crisis and a similar surplus in 2011 and 2012. They now run a deficit of similar size.