Patterns of International Capital Flows and Productivity Growth: New Evidence

Margaux MacDonald

doi:10.1111/roie.12191

journal article Oct 20, 2015

Patterns of International Capital Flows and Productivity Growth: New Evidence

Margaux MacDonald

Review of International Economics Vol. 23 No. 5 pp. 846-872 · Wiley

View at Publisher Save 10.1111/roie.12191

Abstract

AbstractRecent evidence from developing and emerging economies shows a negative correlation between growth and net capital inflows, a contradiction to neoclassical growth theory. I provide updated and disaggregated evidence on the origins of this puzzle. An analysis of the components of capital flows and of gross portfolio positions shows that foreign direct investment is directed towards countries with the highest growth rates, but that portfolio investment outflows exceed these inflows. Liberalized capital accounts further exacerbate this pattern. My results suggest a desire for international portfolio diversification in liquid assets by fast‐growing countries lies at the heart of the puzzle.

Topics

No keywords indexed for this article. Browse by subject →

References

41

[1]

Abaid A. E.Detragiache andT.Tressel “A New Database of Financial Reforms ”IMF working paper 08(266) Washington DC (2008). 10.5089/9781451871241.001

[2]

10.1093/qje/qjr015

[3]

10.1016/j.jimonfin.2007.04.009

[4]

10.7208/chicago/9780226184999.003.0002

[5]

10.1111/jeea.12106

[6]

Beck T. (1999)

[7]

10.1016/j.jinteco.2012.08.003

[8]

Bernanke B. (2005)

[9]

10.1016/j.jmoneco.2012.12.004

[10]

Buera F.andY.Shin “Productivity Growth and Capital Flows: The Dynamics of Reforms ”NBER working paper 15268 Cambridge MA (2011).

[11]

Caballero R. J. “The ‘other’ imbalance and the financial crisis ”NBER Working Paper 15636 Cambridge MA (2010). 10.3386/w15636

[12]

10.1257/aer.99.2.584

[13]

10.1257/aer.98.1.358

[14]

10.1016/j.ecosys.2010.01.004

[15]

10.1016/s1574-0684(05)01009-9

[16]

10.1162/qjec.122.2.535

[17]

Chinn M. D. "A New Measure of Financial Openness" Journal of Comparative Policy Analysis (2008)

[18]

10.1093/wber/15.2.177

[19]

Domestic Saving and International Capital Flows

Martin Feldstein, Charles Horioka

The Economic Journal 10.2307/2231790

[20]

10.2307/1885996

[21]

10.1016/j.jinteco.2012.03.006

[22]

10.1016/j.jinteco.2013.12.007

[23]

10.1093/restud/rdt004

[24]

Gourinchas P.‐O.andH.Rey “External Adjustment Global Imbalances and Valuation Effects ”NBER working paper 19240 Cambridge MA (2013). 10.3386/w19240

[25]

10.1162/0034653043125194

[26]

Why do Some Countries Produce So Much More Output Per Worker than Others?

R. E. Hall, C. I. Jones

The Quarterly Journal of Economics 10.1162/003355399555954

[27]

Heston A. R.Summers andB.Aten “Penn World Table Version 7.1 ” technical report Center for International Comparisons of Production Income and Prices University of Pennsylvania Philadelphia PA (2012).

[28]

IMF “Global Financial Stability Report: The Question for Lasting Stability ” technical report International Monetary Fund Washington DC (2012).

[29]

10.1016/j.jinteco.2005.12.002

[30]

Kose M. A. "Financial Integration and Macroeconomic Volatility" IMF Staff Papers (2003)

[31]

10.1162/003355300555033

[32]

10.1016/s0022-1996(01)00102-7

[33]

10.1016/j.jinteco.2007.02.003

[34]

10.7208/chicago/9780226107288.003.0003

[35]

Lucas R. E. "Why Doesn't Capital Flow from Rich to Poor Countries?" The American Economic Review (1990)

[36]

10.1086/599706

[37]

Nelson R. R. "Investment in Humans, Technological Diffusion, and Economic Growth" The American Economic Review (1966)

[38]

10.1353/eca.2007.0016

[39]

10.2307/2527389

[40]

10.1257/mac.6.3.102

[41]

Growing Like China

Zheng Song, Kjetil Storesletten, Fabrizio Zilibotti

American Economic Review 10.1257/aer.101.1.196

Metrics

10

Citations

41

References

Details

Published: Oct 20, 2015
Vol/Issue: 23(5)
Pages: 846-872
License: View

Authors

M

Margaux MacDonald

Department of Economics Queen's University Kingston ON Canada K7L 3N6

Cite This Article

Margaux MacDonald (2015). Patterns of International Capital Flows and Productivity Growth: New Evidence. Review of International Economics, 23(5), 846-872. https://doi.org/10.1111/roie.12191

Patterns of International Capital Flows and Productivity Growth: New Evidence

You May Also Like