Domestic capital markets were non existent.

As a result, still more sources of working and investment capital are disrupted, amplifying the impact of domestic capital flight.

In May 2008, it demonstrated its domestic dominance by taking over the capital, Beirut.

Private domestic capital formation is the largest source of new investment in developing communities.

Indeed, because capital inflows often cause the domestic exchange rate to appreciate, they encourage further spending on foreign goods as domestic producers become uncompetitive.

Options include international debt financing, domestic tax revenue and user fees, borrowing in domestic capital markets, and public private partnerships for water related investments.

Meanwhile, higher public spending on capital investment and other special procurements will boost domestic demand.

Thus, medium to long term strategies are needed to raise domestic capital for this purpose.

This model presupposes that China will develop domestic capital, rather than simply relying on foreign investment.

Among the drivers of growth, domestic capital formation retained much of its momentum from preceding years.

Regional and domestic developments could push the Kurdish authorities in Erbil, their capital, toward declaring formal independence.

African countries must restructure their domestic financial sectors and develop capital markets and non bank financial institutions.

In August 2010, for instance, over 1,000 people marched in Ukraine's capital Kyiv to condemn domestic violence, and hundreds of volunteers joined the domestic violence awareness campaign.

The latter course risks the worst of all worlds all of the costs of capital controls and all of the domestic policy complications from volatile capital flows, but few of the potential benefits of foreign capital.

So, one reason countries do not like capital inflows is that it means more domestic demand leaks outside.

If they try to clamp down by raising domestic interest rates, they will only attract greater capital inflows.

In short, Japan s national savings still exceed its domestic investment, allowing Japan to be a net capital exporter.

Finally, public purchases of domestic assets to stabilize asset prices and net capital flows will become increasingly common.

However, domestic capital market development requires wide ranging reform and achieving coherence between the policies is not easy.

The Greek government institutes capital controls and is ultimately forced to issue drachmas in order to supply domestic liquidity.

Yes, China needs to strengthen its social safety net and to deepen domestic capital markets before consumption can take off.

For example, while US monetary policy intervention (yes, monetary policy is also intervention) has done little to boost domestic demand, it has spurred domestic capital to search for yield around the world.

At the same time, the qualified foreign institutional investors (QFII) scheme allowed licensed foreign entities to invest in domestic capital markets.

Emerging markets should cope with inflows by finding ways to use foreign capital more effectively, which involves strengthening domestic financial markets.

There, capital inflows create asset bubbles that tend to overheat the domestic economy and drive up wages and consumer prices inordinately.

Although these booms were initially financed by domestic capital, they soon became dependent on foreign capital, which flowed into their economies as advanced country central banks pumped huge amounts of liquidity into financial markets.

British banks, having grown up in the early nineteenth century, when industry s capital needs were modest, specialized in financing foreign trade rather than domestic investment, thereby starving industry of the capital needed to grow.

The implication is that countries should first strengthen their domestic financial sectors and corporate governance, and only later open the capital account.

OIOS is of the view that UN Habitat has not adequately defined its corporate role in raising domestic capital for the Facility.

Private capital flows have an important role in complementing developing countries' domestic resources, the transfer of technology, employment generation and entrepreneurship building.

But most have suffered from the opposite syndrome excessive reliance on capital inflows, which, by spurring domestic credit and consumption, generate temporary growth.

Because JGBs are purchased mainly by domestic organizations and households, there is little risk of capital flight, despite the seriousness of the budget situation.

Also surprising is the increase in Argentina s domestic savings rate, which has enabled self financing of investment which has doubled and, paradoxically, capital outflows.

When production exceeds domestic demand, producers are compelled to expand exports, creating an export oriented, capital intensive industrial structure that supports rapid economic growth.

In addition, net foreign capital inflows are likely to dwindle for several quarters at least, affecting domestic monetary conditions while aggregate demand is weak.

What is needed in southern Europe is acceptance that domestic demand must fall to a level that allows countries to live without further capital inflows.

If they let the exchange rate rise, they might deter some capital inflows, but they would also penalize their exporters and push up domestic unemployment.

It will also make available to local actors, bridging finance and credit enhancements that can catalyse domestic capital, thereby augmenting community savings and public investment.

Its debtors and creditors are all members of the same, wealthy currency union, whose current account surplus with the rest of the world means that it is a net exporter of capital (that is, domestic savings exceed domestic investment).

When fully functional, it will provide financing for the mobilization of seed capital and technical assistance to develop and support mechanisms for mobilizing domestic resources and capital in order to improve the availability of affordable housing, adequate shelter and infrastructure.

This supply chain is characterized by the dominance of the state owned banks, high domestic savings, relatively under developed financial markets, and a closed capital account.

So what should developing countries do, aside from maintaining sound macroeconomic policies, curbing excessive domestic financial leverage, and attempting to isolate themselves from volatile capital inflows?

The key is to reflect on six kinds of capital goods business capital, infrastructure, human capital, intellectual capital, natural capital, and social capital.

Broadly speaking, capital inflows led to real revaluation and a lower domestic savings rate relative to investment in the southern countries, resulting in structural current account deficits.

Finally, local currency bond markets and, more generally, domestic capital markets in emerging economies must be explored further, in order to lengthen the tenure of financial flows.