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Determinants of Investment by the Norwegian Sovereign Wealth Fund: GDP vs. Institutions

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Listed:
  • Caner Mehmet

    (North Carolina State University)

  • Caner Turanay

    (North Carolina State University)

  • Grennes Thomas J

    (North Carolina State University)

Abstract

During the current episode of globalization, capital has flown primarily to high income countries. Attempts to explain this "Lucas Paradox" have focused on the quality of institutions. We analyze data from a major institutional investor, the Norwegian Sovereign Wealth Fund, to estimate the separate effects of income per capita and institutional quality on international capital flows. After controlling for institutional quality, GDP per capita remains the primary determinant of investment.

Suggested Citation

  • Caner Mehmet & Caner Turanay & Grennes Thomas J, 2011. "Determinants of Investment by the Norwegian Sovereign Wealth Fund: GDP vs. Institutions," Global Economy Journal, De Gruyter, vol. 11(1), pages 1-34, March.
    • Handle: RePEc:bpj:glecon:v:11:y:2011:i:1:n:2
    DOI: 10.2202/1524-5861.1702
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    References listed on IDEAS

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    4. René M. Stulz, 2007. "The Limits of Financial Globalization," Journal of Applied Corporate Finance, Morgan Stanley, vol. 19(1), pages 8-15, January.
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    7. Daron Acemoglu & Simon Johnson, 2005. "Unbundling Institutions," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 949-995, October.
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