Foreign Capital in a Growth Model
AbstractWithin the mechanism of endogenous growth, this paper empirically investigates the impact of financial capital on economic growth for a panel of 60 developing countries, through the channel of domestic capital formation. By estimating the model for different income groups, it is found that while private FDI flows exert beneficial complementarity effects on the domestic capital formation across all income-group countries, the official financial flows contribute to increasing investment in the middle income economies, but not in the low income countries. The latter appears to demonstrate that the aid-growth nexus is supported in the middle income countries, whereas the misallocation of official inflows is more likely to exist in the low income countries, suggesting that aid effectiveness remains conditional on the domestic policy environment. Copyright � 2008 The Authors; Journal compilation � 2008 Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of Development Economics.
Volume (Year): 12 (2008)
Issue (Month): 1 (02)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1363-6669
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- Moore, Tomoe, 2010. "A Critical Appraisal of McKinnon's Complementarity Hypothesis: Does the Real Rate of Return on Money Matter for Investment in Developing Countries?," World Development, Elsevier, vol. 38(3), pages 260-269, March.
- Zaiter Lahimer, Mahjouba, 2011. "L’impact des entrées de capitaux privés sur la croissance économique dans les pays en développement," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/7670 edited by Sterdyniak, Henri, September.
- Morgan, Myfanwy & Barry, Christine A. & Donovan, Jenny L. & Sandall, Jane & Wolfe, Charles D.A. & Boaz, Annette, 2011. "Implementing ‘translational’ biomedical research: Convergence and divergence among clinical and basic scientists," Social Science & Medicine, Elsevier, vol. 73(7), pages 945-952.
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