IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-26-00152.html

Evolution of global factors in emerging market capital flows

Author

Listed:
  • Neha Verma

    (Kirori Mal College, University of Delhi)

Abstract

This paper examines whether the role of global factors in driving capital inflows has changed structurally in the past decades for Emerging Market and Developing Economies (EMDEs) by decomposing the capital flows into global, regional, and country-specific components using a dynamic factor model (DFM). A block-structured DFM shows that Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) inflows respond differently to global economic and financial conditions, with FDI being associated with policy-uncertainty shocks and FPI with financial-market sentiment. Moreover, the contribution of the global factor to capital flow variance exhibits statistically significant structural breaks post the Global Financial Crisis (GFC), with a persistent decline in FPI and a partial recovery in FDI. The results indicate a structural shift in the dynamics of EMDE capital flows following the GFC, with distinct patterns across long-term (FDI) and short-term (FPI) flows.

Suggested Citation

  • Neha Verma, 2026. "Evolution of global factors in emerging market capital flows," Economics Bulletin, AccessEcon, vol. 46(3), pages 1100-1108.
    • Handle: RePEc:ebl:ecbull:eb-26-00152
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2026/Volume46/EB-26-V46-I3-P91.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-26-00152. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.