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Capital Mobility, Foreign Aid, and Openness: A Reappraisal

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  • Javed Younas

    (West Virginia University)

Abstract

Payne and Kumazawa (2005) examine the effect of domestic savings, foreign aid, the evolution of capital mobility over time, and openness on investment rates using a panel of sub-Saharan African countries. They find that capital mobility has increased over time and that foreign aid and openness positively impact investment. We extend their work by accounting for business cycle effects and endogeneity issues. Accounting for these factors does not qualitatively change their findings except that we find a substantially larger impact of foreign aid in supporting domestic investment.

Suggested Citation

  • Javed Younas, 2007. "Capital Mobility, Foreign Aid, and Openness: A Reappraisal," Economics Bulletin, AccessEcon, vol. 6(12), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-07f40001
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    References listed on IDEAS

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    1. Tamim Bayoumi, 1990. "Saving-Investment Correlations: Immobile Capital, Government Policy, or Endogenous Behavior?," IMF Staff Papers, Palgrave Macmillan, vol. 37(2), pages 360-387, June.
    2. James Payne & Risa Kumazawa, 2005. "Capital mobility, foreign aid, and openness: further panel data evidence from sub-Saharan Africa," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 29(1), pages 122-126, March.
    3. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    4. Sinha, Tapen & Sinha, Dipendra, 2004. "The mother of all puzzles would not go away," Economics Letters, Elsevier, vol. 82(2), pages 259-267, February.
    5. Michael Dooley & Jeffrey Frankel & Donald J. Mathieson, 1987. "International Capital Mobility: What Do Saving-Investment Correlations Tell Us?," IMF Staff Papers, Palgrave Macmillan, vol. 34(3), pages 503-530, September.
    6. World Bank, 2006. "World Development Indicators 2006," World Bank Publications - Books, The World Bank Group, number 8151, December.
    7. Kasuga, Hidefumi, 2004. "Saving-investment correlations in developing countries," Economics Letters, Elsevier, vol. 83(3), pages 371-376, June.
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    Cited by:

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    2. Muhammad Shahbaz & Nadeem Ahmad & Abu Wahid, 2010. "Savings–Investment Correlation and Capital Outflow: The Case of Pakistan," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 17(1), pages 80-97, May.

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    More about this item

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F0 - International Economics - - General

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