It is normal for emerging countries to have external deficits, but these deficits must simply be financed appropriately

Emerging countries have a far lower level of per capita income and capital than OECD countries: it is therefore normal for emerging countries to have a structural external deficit. But it is often asserted that the external deficits of emerging countries are dangerous, because they can trigger balance-of-payments crises. There are therefore two possibilities: Requiring that emerging countries have no external deficit in order to avoid crises; but this would have the consequence of curbing investment and growth in emerging countries; Obtaining better financing for emerging countries, via long-term capital, direct investment, and not via short-term financial capital, to avoid the procyclical nature of capital flows.