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Structural Risks of Foreign Liabilities: Impact of Investment Income Repatriation in Emerging Economies

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  • Tetiana Rodionova

Abstract

This paper explores the structure of foreign liabilities, the extent of capital repatriation in the form of investment income of foreign investors and its impact in emerging markets. The concept “coverage ratio of foreign investment” is introduced, which is defined as the share of total income repatriated by foreign investors in the respective cumulative inflows of the financial account. The impact of foreign investors’ returns onto external imbalances in emerging economies is studied empirically. The tendency of growing role of the investment income balance in the formation of the current account balance reveals new threats for the emerging economies. Copyright CEEUN 2013

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  • Tetiana Rodionova, 2013. "Structural Risks of Foreign Liabilities: Impact of Investment Income Repatriation in Emerging Economies," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 20(2), pages 119-129, October.
    • Handle: RePEc:spr:trstrv:v:20:y:2013:i:2:p:119-129
    DOI: 10.1007/s11300-013-0274-6
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    References listed on IDEAS

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    1. Eswar S. Prasad, 2011. "Role reversal in global finance," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 339-390.
    2. Dani Rodrik & Andres Velasco, 1999. "Short-Term Capital Flows," NBER Working Papers 7364, National Bureau of Economic Research, Inc.
    3. Josef C. Brada & Vladim??r Tom????k, 2003. "Reinvested Earnings Bias, The ???Five Percent??? Rule and the Interpretation of the Balance of Payments ??? With an Application to Transition Economies," William Davidson Institute Working Papers Series 543, William Davidson Institute at the University of Michigan.
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    Cited by:

    1. T. Rodionova & S. Yakubovskiy & A. Kyfak, 2019. "Foreign Capital Flows as Factors of Economic Growth in Bulgaria, Czech Republic, Hungary and Poland," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(4), pages 48-57, December.

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    More about this item

    Keywords

    Emerging markets; International investment position; Current account balance; Income from foreign investments; F21; F32; F34; O57;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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