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Managerial ability and capital flows


  • Silva, André C.


Capital flows with low intensity and flows to middle-income countries. Physical and human capital alone cannot explain this pattern. I present a model to show how managerial ability--the ability to run risky projects--can increase total factor productivity and explain the pattern of capital flows. The model implies that countries with more high-ability managers use more risky projects and have higher productivity. I define proxies for managerial ability with data on physical and human capital, schooling, and entrepreneurship. Consistent with the pattern of capital flows, the model predicts similar returns to capital across countries and higher returns in middle-income countries.

Suggested Citation

  • Silva, André C., 2010. "Managerial ability and capital flows," Journal of Development Economics, Elsevier, vol. 93(1), pages 126-136, September.
  • Handle: RePEc:eee:deveco:v:93:y:2010:i:1:p:126-136

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    Cited by:

    1. Delis, Manthos D & Iosifidi, Maria & Kazakis, Pantelis, 2017. "Management as the sine qua non for M&A success," MPRA Paper 81283, University Library of Munich, Germany.
    2. Cavaco, Sandra & Crifo, Patricia & Rebérioux, Antoine & Roudaut, Gwenael, 2017. "Independent directors: Less informed but better selected than affiliated board members?," Journal of Corporate Finance, Elsevier, vol. 43(C), pages 106-121.
    3. Peter Demerjian & Baruch Lev & Sarah McVay, 2012. "Quantifying Managerial Ability: A New Measure and Validity Tests," Management Science, INFORMS, vol. 58(7), pages 1229-1248, July.


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