With emerging markets as an asset class hotter than ever, it might be expected that capital flows to them would also be hitting all-time highs. That would be the correct view of the aggregate situation: according to the Institute of International Finance, net private capital flows to emerging markets topped $500 billion in 2006 – the second year in succession that has happened. (In 2004, by contrast, those flows were a “mere” $350 billion.)
Latin America, however, seems to have been left out of the party somewhat. The region received net private capital flows of a healthy $71 billion in 2005 but that...
