Journal ArticleDOI
Capital Flows to Developing Countries: The Allocation Puzzle
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TLDR
This paper showed that the allocation of capital flows across developing countries is the opposite of this prediction: capital does not flow more to countries that invest and grow more, and the solution to the allocation puzzle lies at the nexus between growth, saving and international reserve accumulation.Abstract:
The textbook neoclassical growth model predicts that countries with faster productivity growth should invest more and attract more foreign capital. We show that the allocation of capital flows across developing countries is the opposite of this prediction: capital does not flow more to countries that invest and grow more. We call this puzzle the “allocation puzzle”. Using a wedge analysis, we find that the pattern of capital flows is driven by national saving: the allocation puzzle is a saving puzzle. Further disaggregation of capital flows reveals that the allocation puzzle is also related to the pattern of accumulation of international reserves. The solution to the “allocation puzzle”, thus, lies at the nexus between growth, saving, and international reserve accumulation. We conclude with a discussion of some possible avenues for research.read more
Citations
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Taxi, Takeoff and Landing: Behavioural Patterns of Capital Flows to Emerging Markets
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BookDOI
External performance in low-income countries
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Markets, externalities, and the dynamic gains of openness
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Quantities and Prices in China’s Monetary Policy Transmission From Window Guidance to Interbank Rates
Naoyuki Yoshino,Stefan Angrick +1 more
TL;DR: This article investigated the transmission mechanism of Chinese monetary policy for the period 2000-2015 in order to determine the effectiveness of different policy instruments and, subsequently, the effect of bank financing on the broader macroeconomy.
Journal ArticleDOI
Labour institutions and vulnerability of developing economies under capital inflows
TL;DR: In this paper, the authors argue that labour institutions such as efficiency wages or their analogues more typical for the former planned economies, can aggravate a vulnerability of developing economies caused by windfalls, such as additional oil income or foreign aid.
References
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Journal ArticleDOI
A Contribution to the Empirics of Economic Growth
TL;DR: The authors examined whether the Solow growth model is consistent with the international variation in the standard of living, and they showed that an augmented Solow model that includes accumulation of human as well as physical capital provides an excellent description of the cross-country data.
Journal ArticleDOI
Finance and Growth: Schumpeter Might Be Right
TL;DR: In this paper, the authors examined a cross-section of about 80 countries for the period 1960-89 and found that various measures of financial development are strongly associated with both current and later rates of economic growth.
Journal ArticleDOI
Why do Some Countries Produce So Much More Output Per Worker than Others
Robert E. Hall,Charles I. Jones +1 more
TL;DR: This article showed that the differences in capital accumulation, productivity, and therefore output per worker are driven by differences in institutions and government policies, which are referred to as social infrastructure and called social infrastructure as endogenous, determined historically by location and other factors captured by language.
Journal ArticleDOI
Domestic Saving and International Capital Flows
TL;DR: In this paper, the authors analyzed the international capital market and analyzed a wide range of issues including the nation's optimal rate of saving and the incidence of tax changes and found that saving that originates in a country remains 'to be invested there'.
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