Patterns of international capital flows and their implications for developing countries
No wp-2017-171, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)
According to a standard economic theory, capital should flow from rich capital-abundant countries to poor capital-scarce countries. However, a reverse pattern has prevailed in the world economy. This is the so-called Lucas paradox. In addition, it has been shown that counterintuitively there is negative correlation between capital inflow and productivity growth across developing countries. This is the so-called allocation puzzle. This survey attempts to shed light on the following questions: 1) What are the patterns of international capital flows in the world economy?
Keywords: International capital flows; Lucas Paradox; Allocation Puzzle (search for similar items in EconPapers)
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