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- W1577889216 abstract "We characterize the patterns of capital flows between rich and poor countries. Traditional economic models predict that capital should flow from capital-rich to capital-poor economies. We find that, in recent years, capital has been flowing in the opposite direction, although foreign direct investment flows do behave more in line with theory. Do these perverse patterns of flows dampen growth in non-industrial countries by depriving them of financing for investment? To the contrary, we find that non-industrial countries that have relied more on foreign finance have not grown faster in the long run. By contrast, growth and the extent of foreign financing are positively correlated in industrial countries. We argue that the reason for this difference may lie in the limited ability of non-industrial countries to absorb foreign capital. 1 We are grateful to Menzie Chinn, Josh Felman, Olivier Jeanne, and Gian Maria Milesi-Ferretti for helpful comments and discussions, and to Manzoor Gill, Ioannis Tokatlidis and Junko Sekine for excellent research assistance. We also thank our discussant, Susan Collins, and other participants at the Jackson Home Symposium. The views expressed in this paper are those of the authors, and do not necessarily represent those of the IMF, its management, or its Board." @default.
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- W1577889216 date "2006-01-01" @default.
- W1577889216 modified "2023-09-23" @default.
- W1577889216 title "Patterns of international capital flows and their implications for economic development" @default.
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