Is FDI a Safer Form of Financing?
AbstractIt has been common to attribute financial crises to short-term capital inflows, while foreign direct investment (FDI) is seen as a safer form of finance. The relationship between crises and the composition of capital flows is particularly relevant at present because the flow of capital to Latin America is becoming increasingly dominated by FDI. This paper asks whether the composition of capital inflows and of the stock of foreign liabilities is relevant for financial crises, be it their frequency, depth, or length. It explores the possible role of FDI as a benign form of external liability relative to other classes of liabilities, reviewing both analytical and empirical arguments.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4201.
Date of creation: Mar 2000
Date of revision:
Other versions of this item:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ricardo Hausmann & Ugo Panizza & Ernesto H. Stein, 2000.
"Why Do Countries Float the Way They Float?,"
6467, Inter-American Development Bank.
- Frankel, Jeffrey A. & Rose, Andrew K., 1996.
"Currency crashes in emerging markets: An empirical treatment,"
Journal of International Economics,
Elsevier, vol. 41(3-4), pages 351-366, November.
- Jeffrey A. Frankel & Andrew K. Rose, 1996. "Currency crashes in emerging markets: an empirical treatment," International Finance Discussion Papers 534, Board of Governors of the Federal Reserve System (U.S.).
- Paul Krugman, 1999. "Balance Sheets, the Transfer Problem, and Financial Crises," International Tax and Public Finance, Springer, vol. 6(4), pages 459-472, November.
- Graciela Laura Kaminsky, 1997.
"Leading Indicators of Currency Crises,"
IMF Working Papers
97/79, International Monetary Fund.
- Kaminsky, Graciela & Lizondo, Saul & Reinhart, Carmen M., 1997. "Leading indicators of currency crises," Policy Research Working Paper Series 1852, The World Bank.
- Reinhart, Carmen & Kaminsky, Graciela & Lizondo, Saul, 1998. "Leading Indicators of Currency Crises," MPRA Paper 6981, University Library of Munich, Germany.
- Chang, Roberto & Velasco, Andres, 2000.
"Financial Fragility and the Exchange Rate Regime,"
Journal of Economic Theory,
Elsevier, vol. 92(1), pages 1-34, May.
- Roberto Chang & Andres Velasco, 1998. "Financial Fragility and the Exchange Rate Regime," NBER Working Papers 6469, National Bureau of Economic Research, Inc.
- Roberto Chang & Andres Velasco, 1997. "Financial fragility and the exchange rate regime," Working Paper 97-16, Federal Reserve Bank of Atlanta.
- Barry Eichengreen & Ricardo Hausmann, 1999.
"Exchange Rates and Financial Fragility,"
NBER Working Papers
7418, National Bureau of Economic Research, Inc.
- Barry Eichengreen & Ricardo Hausmann, 1999. "Exchange rates and financial fragility," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 329-368.
- Reinhart, Carmen & Calvo, Guillermo, 2000. "When Capital Inflows Come to a Sudden Stop: Consequences and Policy Options," MPRA Paper 6982, University Library of Munich, Germany.
- Sarno, Lucio & Taylor, Mark P., 1999. "Hot money, accounting labels and the permanence of capital flows to developing countries: an empirical investigation," Journal of Development Economics, Elsevier, vol. 59(2), pages 337-364, August.
- Reinhart, Carmen & Goldstein, Morris & Kaminsky, Graciela, 2000. "Assessing financial vulnerability, an early warning system for emerging markets: Introduction," MPRA Paper 13629, University Library of Munich, Germany.
- Classens, S. & Dooley, M.P. & Warner, A., 1995.
"Portfolio Capital Flows: Hot or Cold,"
501, Harvard - Institute for International Development.
- Guillermo A. Calvo, 1998. "Capital Flows and Capital-Market Crises: The Simple Economics of Sudden Stops," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 35-54, November.
- Agbloyor, Elikplimi Komla & Abor, Joshua & Adjasi, Charles Komla Delali & Yawson, Alfred, 2013. "Exploring the causality links between financial markets and foreign direct investment in Africa," Research in International Business and Finance, Elsevier, vol. 28(C), pages 118-134.
- Bordo, Michael D & Flandreau, Marc, 2001.
"Core, Periphery, Exchange Rate Regimes and Globalization,"
CEPR Discussion Papers
3077, C.E.P.R. Discussion Papers.
- Michael D. Bordo & Marc Flandreau, 2003. "Core, Periphery, Exchange Rate Regimes, and Globalization," NBER Chapters, in: Globalization in Historical Perspective, pages 417-472 National Bureau of Economic Research, Inc.
- Michael D. Bordo & Marc Flandreau, 2001. "Core, Periphery, Exchange Rate Regimes, and Globalization," Sciences Po publications nÂ°3077, Sciences Po.
- Michael D. Bordo & Marc Flandreau, 2001. "Core, Periphery, Exchange Rate Regimes, and Globalization," NBER Working Papers 8584, National Bureau of Economic Research, Inc.
- Hoffmann, M., 2002. "Cross-Country Evidence on the Link between the Level of Infrastructure and Capital Inflows," CEG Working Papers 20024, Trinity College Dublin, Department of Economics.
- repec:nbr:nberwo:11387 is not listed on IDEAS
- Joel Deichmann & Socrates Karidis & Selin Sayek, 2003. "Foreign direct investment in Turkey: regional determinants," Applied Economics, Taylor & Francis Journals, vol. 35(16), pages 1767-1778.
- Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2000. "External Capital Structure: Theory and Evidence," CEPR Discussion Papers 2583, C.E.P.R. Discussion Papers.
- Sula, Ozan & Willett, Thomas D., 2009. "The reversibility of different types of capital flows to emerging markets," Emerging Markets Review, Elsevier, vol. 10(4), pages 296-310, December.
- Ayse Imrohoroglu & Krishna B. Kumar, 2003. "Entry Costs, Intermediation, and Capital Flows," Macroeconomics 0304001, EconWPA.
- Peter Nunnenkamp, 2001. "Too Much, Too Little, or Too Volatile? International Capital Flows to Developing Countries in the 1990s," Kiel Working Papers 1036, Kiel Institute for the World Economy.
- Arslan Razmi, 2005. "The Effects of Export-Oriented, FDI-Friendly Policies on the Balance of Payments in a Developing Economy: A General Equilibrium Investigation," UMASS Amherst Economics Working Papers 2005-03, University of Massachusetts Amherst, Department of Economics, revised Sep 2006.
- Ayse Imrohoroglu & Krishna B. Kumar, 2004. "Intermediation Costs and Capital Flows," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(3), pages 586-612, July.
- Anita Giselle Doraisami, 2007. "Financial crisis in Malaysia: did FDI flows contribute to vulnerability?," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(7), pages 949-962.
- Jo�l van der Weele, 2005. "Financing development: debt versus equity," DNB Working Papers 038, Netherlands Central Bank, Research Department.
- Gordon H. HANSON, 2001. "Should Countries Promote Foreign Direct Investment?," G-24 Discussion Papers 9, United Nations Conference on Trade and Development.
- Talamo, Giuseppina, 2010. "Corporate governance and capital flows," MPRA Paper 35853, University Library of Munich, Germany, revised 2011.
- Thomas D. Willett & Aida Budiman & Arthur Denzau & Gab-Je Jo & Cesar Ramos & John Thomas, 2001. "The Falsification of Four Popular Hypotheses about International Financial Behavior during the Asian Crisis," Claremont Colleges Working Papers 2001-06, Claremont Colleges, revised Sep 2001.
- SAIBU, Olufemi Muibi, 2012.
"An analysis of causal nexus between foreign direct investment, exchange rate and financial market development in Nigeria (1970 to 2009),"
42429, University Library of Munich, Germany.
- M. Olufemi Saibu, 2012. "An analysis of causal nexus between foreign direct investment, exchange rate and financial market development in Nigeria (1970 to 2009)," African Journal of Economic and Sustainable Development, Inderscience Enterprises Ltd, vol. 1(1), pages 95-102.
- Mathias Hoffmann, 2002. "Cross-Country Evidence on the Link between the Level of Infrastructure and Capital Inflows," Trinity Economics Papers 200210, Trinity College Dublin, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Monica Bazan).
If references are entirely missing, you can add them using this form.