 Capital Movements, Economic Growth and Investment in Developing CountriesChapter 7 in Foreign Capital in Developing Economies, 1999, pp 133-152 from Palgrave Macmillan Abstract: Abstract The neoclassical growth model, in both its basic and its augmented version, provides an optimistic view of the consequences of capital movements for a developing economy: as foreign inflows are used to finance investment in physical capital, opening to capital mobility should make a developing country (DC) an attractive location for international investors (provided it is endowed with, and will accumulate, enough human capital according to the augmented model with partial mobility). Consequently, the main predictions of the neoclassical theory are that: First, the integration in international capital markets will foster the speed of convergence to the steady state and therefore raise the growth rate for those developing economies that become net capital importers. Second, the larger the (per capita) inflow of net foreign capital, the higher the ex ante marginal product of capital hence the more the underlying fundamentals of a DC are conducive to economic growth (see Section 4.1). Keywords: Foreign Capital; Capital Inflow; Debt Crisis; Investment Rate; Capital Movement (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-27620-2_7 Ordering information: This item can be ordered from DOI: 10.1007/978-1-349-27620-2_7 Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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