Determinants of Investment Flows into Emerging Markets

Carlos Andrés Amaya () and Peter Rowland ()

Borradores de Economia from Banco de la Republica de Colombia

Abstract: The understanding of foreign investment flows is important for emerging market policy makers, since such flows make up a considerable part of the balance of payments, and since such flows tend to be very volatile. Sudden stops or reversals of investment flows have, indeed, played an important part in recent emerging market crises. This paper presents a study of emerging market investment flows and their determinants. Using first a relatively simple cross-country framework to study investment flows in the year 2000 and then a panel-data framework to study such flows for the time period 1980 to 1997, a number of variables emerge as significant in determining investment flows. In general, large open economies with a high growth rate attract more flows than small closed economies with a sluggish growth rate. In addition, the results suggest that sound fiscal policies together with moderate debt levels results in higher levels of foreign investment. The business cycle in the developed countries also has an impact on such flows.

Keywords: Foreign direct investment; portfolio investment; developing countries (search for similar items in EconPapers)
JEL-codes: C33 F21 F34 (search for similar items in EconPapers)
Date: 2004-11
New Economics Papers: this item is included in nep-fin, nep-ifn and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://doi.org/10.32468/be.313 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bdr:borrec:313

Access Statistics for this paper

More papers in Borradores de Economia from Banco de la Republica de Colombia Cra 7 # 14-78. Contact information at EDIRC.
Bibliographic data for series maintained by Clorith Angélica Bahos Olivera ().