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Growth Theory and the Determinants of Capital Flows

In: Foreign Capital in Developing Economies

Author

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  • Stefano Manzocchi

    (University of Perugia)

Abstract

This chapter provides a theoretical investigation of the factors affecting the flows of net foreign capital in the long run, with special attention to the case of a developing economy. Our interest in long-run phenomena naturally leads us to adopt the theory of economic growth as the main reference in the study of the determinants of the net foreign asset position of a developing country (DC). Moreover, in the last ten years growth theory has undergone a radical process of renewal and has remarkably enlarged its scope, and this makes it an extremely promising tool for approaching the issue of capital movements. However, some old models are still very powerful and stand as starting points for more recent refinements: this is the case of the Solow (1956) model, for instance.

Suggested Citation

  • Stefano Manzocchi, 1999. "Growth Theory and the Determinants of Capital Flows," Palgrave Macmillan Books, in: Foreign Capital in Developing Economies, chapter 3, pages 33-53, Palgrave Macmillan.
  • Handle: RePEc:pal:palchp:978-1-349-27620-2_3
    DOI: 10.1007/978-1-349-27620-2_3
    as

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