With the opening of stock and bond markets to unprecedented levels of foreign trading, portfolio investors have taken an overwhelming lead in providing new sources of capital to developing countries. As the author points out, “investment in stocks and bonds increased from US$33 million in 1984 to US$102.7 billion in 1996,” an increase of 311,112%, which by 1996 accounted for 66% of all private investment flows to developing countries (p. 9). One important result has been the displacement of official development lending, now only about 1% of all net long-term flows to the developing world, with short-term portfolio investments. Another result has been the increasing concentration of power and influence of these institutional investors, who rely on their integrated communications networks and their control over substantial financial assets to affect both currency markets and governmental decision making.

Haley provides a strong challenge to neoliberals who see institutional investors as enhancing the prospects for democracy in the developing world. The book is filled with convincing statistical and qualitative evidence that institutional investors are more often than not skeptical of democratic forms of government. Money managers often prefer the stability of authoritarian institutions that can guarantee a stable environment for quick returns on short-term portfolio investments. These investors have often worked to reinforce the most authoritarian tendencies and processes in the developing world by promoting economic austerity, debt reduction, and increased executive power over democratic decision making. Most importantly, institutional investors have succeeded in using their economic leverage and political clout to structure financial markets to allow for quick entry and exit, thereby reinforcing the power of money managers whose displeasure with government policies can result in massive capital flight, complete with devastating socioeconomic consequences.