Portfolio Investments and Their Impact on The Economy of Developing Countries

Abstract

This article examines the growing role of portfolio investments in the economic development of developing countries. It highlights how such investments provide access to much-needed foreign capital, which can help finance infrastructure, public services, and private sector growth. The article explains how portfolio flows can contribute to the development of domestic financial markets by increasing liquidity, improving price discovery, and promoting transparency and good corporate governance. Additionally, it emphasizes the role of foreign investors in encouraging regulatory reforms and higher standards of financial disclosure.