Patterns of International Capital Flows and Productivity Growth: New Evidence

Margaux MacDonald ()

No 274671, Queen's Economics Department Working Papers from Queen's University - Department of Economics

Abstract: Recent 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.

Keywords: Demand and Price Analysis; Financial Economics (search for similar items in EconPapers)
Pages: 34
Date: 2015-07
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Related works:
Journal Article: Patterns of International Capital Flows and Productivity Growth: New Evidence (2015)
Working Paper: Patterns Of International Capital Flows And Productivity Growth: New Evidence (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:quedwp:274671

DOI: 10.22004/ag.econ.274671

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