Capital flows and economic growth in the era of financial integration and crisis, 1990-2010

Joshua Aizenman, Yothin Jinjarak and Donghyun Park

Santa Cruz Department of Economics, Working Paper Series from Department of Economics, UC Santa Cruz

Abstract: We investigate the relationship between economic growth and lagged internationalcapital flows, disaggregated into FDI, portfolio investment, equity investment, and shorttermdebt. We follow about 100 countries during 1990-2010 when emerging marketsbecame more integrated into the international financial system. We look at therelationship both before and after the global crisis. Our study reveals a complex andmixed picture. The relationship between growth and lagged capital flows depends on thetype of flows, economic structure, and global growth patterns. We find a large and robustrelationship between FDI – both inflows and outflows – and growth. The relationshipbetween growth and equity flows is smaller and less stable. Finally, the relationshipbetween growth and short-term debt is nil before the crisis, and negative during the crisis

Keywords: Social and Behavioral Sciences; Capital flows; economic growth; FDI; portfolio investment; equity investment; short-term debt; financial integration; financial crisis (search for similar items in EconPapers)
Date: 2011-10-15
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Citations: View citations in EconPapers (17)

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Related works:
Journal Article: Capital Flows and Economic Growth in the Era of Financial Integration and Crisis, 1990–2010 (2013)
Working Paper: Capital Flows and Economic Growth in the Era of Financial Integration and Crisis, 1990-2010 (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:ucscec:qt3003w1qd

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