Journal Article

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

Jinjarak, Yothin, Park, Donghyun, Aizenman, Joshua

2013

Overview

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.

• Publisher: Springer US,Springer Science + Business Media B.V,Springer Nature B.V
• Subject: 1990-2010 / Auslandsinvestition / Capital / Capital flow / Capital movement / Crises / Debt / Development Economics / Economic crisis / Economic development / Economic growth / Economic Policy / Economic statistics / Economic structure / Economic theory / Economics / Economics and Finance / Emerging markets / Equity / European Integration / Financial crisis / Financial integration / Financial systems / Finanzkrise / Foreign direct investment / Foreign investment / Global economy / Growth models / International / International Economics / International finance / Internationale Wirtschaftsbeziehungen / Investments / Kapitalbeteiligung / Kapitalmobilität / Macroeconomics/Monetary Economics//Financial Economics / Open economies / Portfolio investments / Portfolio-Investition / Portfolios / Research Article / Schulden / Short term / Short term debt / Studies / Welt