Investment and Growth in Rich and Poor Countries

Yin-Wong Cheung, Michael Dooley and Vladyslav Sushko

No 17788, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper revisits the association between investment and growth. The empirical findings highlight substantial heterogeneity for the effect of investment on growth and suggest a possible negative association. Results based on a battery of cross-sectional and time-series regressions show that the link between investment and growth has weakened over time and that investment in high-income countries is more likely to have a negative effect on growth. The adverse effect for high-income countries appears to have increased over time. An implication is that uphill capital flows could be associated with negative or zero returns. The result is robust to the presence of control variables that are commonly included in growth studies.

JEL-codes: F43 O4 O57 (search for similar items in EconPapers)
Date: 2012-01
New Economics Papers: this item is included in nep-dev and nep-pbe
Note: IFM
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Citations: View citations in EconPapers (10)

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