Capital Flows and Economic Growth in the Era of Financial Integration and Crisis, 1990-2010

Joshua Aizenman, Yothin Jinjarak and Donghyun Park

No 17502, NBER Working Papers from National Bureau of Economic Research, Inc

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

JEL-codes: F21 F32 F43 (search for similar items in EconPapers)
Date: 2011-10
New Economics Papers: this item is included in nep-cis, nep-dev, nep-fdg, nep-ifn and nep-opm
Note: ITI
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Citations: View citations in EconPapers (11)

Published as Joshua Aizenman & Yothin Jinjarak & Donghyun Park, 2013. "Capital Flows and Economic Growth in the Era of Financial Integration and Crisis, 1990â2010," Open Economies Review, Springer, vol. 24(3), pages 371-396, July.

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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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