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Capital flows and economic growth in the era of financial integration and crisis, 1990-2010

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  • Aizenman, Joshua
  • Jinjarak, Yothin
  • Park, Donghyun

Abstract

We investigate the relationship between economic growth and lagged internationalcapital flows, disaggregated into FDI, portfolio investment, equity investment, and shorttermdebt. We follow about 100 countries during 1990-2010 when emerging marketsbecame more integrated into the international financial system. We look at therelationship both before and after the global crisis. Our study reveals a complex andmixed picture. The relationship between growth and lagged capital flows depends on thetype of flows, economic structure, and global growth patterns. We find a large and robustrelationship between FDI – both inflows and outflows – and growth. The relationshipbetween growth and equity flows is smaller and less stable. Finally, the relationshipbetween growth and short-term debt is nil before the crisis, and negative during the crisis

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  • Aizenman, Joshua & Jinjarak, Yothin & Park, Donghyun, 2011. "Capital flows and economic growth in the era of financial integration and crisis, 1990-2010," Santa Cruz Department of Economics, Working Paper Series qt3003w1qd, Department of Economics, UC Santa Cruz.
    • Handle: RePEc:cdl:ucscec:qt3003w1qd
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    Cited by:

    1. Stephen Grenville, 2012. "Rethinking Capital Flows for Emerging East Asia," ADBI Working Papers 362, Asian Development Bank Institute.
    2. Dmitriy Kovtun & Alexis Meyer-Cirkel & Ms. Zuzana Murgasova & Mr. Dustin Smith & Suchanan Tambunlertchai, 2014. "Boosting Job Growth in the Western Balkans," IMF Working Papers 2014/016, International Monetary Fund.
    3. Ewa Karwowski & Engelbert Stockhammer, 2017. "Financialisation in emerging economies: a systematic overview and comparison with Anglo-Saxon economies," Economic and Political Studies, Taylor & Francis Journals, vol. 5(1), pages 60-86, January.
    4. Philipp Harms & Pierre-Guillaume Méon, 2013. "The Growth Effects of Greenfield Investment and Mergers and Acquisitions: Econometric Investigation and Implication for MENA Countries," Working Papers 794, Economic Research Forum, revised Nov 2013.
    5. Ewa Karwowski, 2017. "Corporate financialisation in South Africa: From investment strike to housing bubble," Economics Discussion Papers 2017-7, School of Economics, Kingston University London.
    6. Harms, Philipp & Méon, Pierre-Guillaume, 2011. "An FDI is an FDI is an FDI? The growth effects of greenfield investment and mergers and acquisitions in developing countries," Proceedings of the German Development Economics Conference, Berlin 2011 38, Verein für Socialpolitik, Research Committee Development Economics.
    7. Wiesława Lizinska & Roman Kisiel & Alina Zrobek-Rozanska, 2020. "Foreign Direct Investment in Poland and Changes in the Branch Structure," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 201-214.
    8. Philipp Harms & Pierre-Guillaume Méon, 2014. "Good and bad FDI: The growth effects of greenfield investment and mergers and acquisitions in developing countries," Working Papers CEB 14-021, ULB -- Universite Libre de Bruxelles.
    9. Ewubare, Dennis Brown & Ozigbu, chukwuma Johnbosco, 2017. "International Capital Flows and Inclusive Growth in Nigeria," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 3(9), pages 182-196, 09-2017.
    10. Nyang`oro Owen, 2017. "Working Paper 285 - Capital Inflows and Economic Growth in Sub-Saharan Africa," Working Paper Series 2409, African Development Bank.
    11. Brittany Baumann & Kevin Gallagher, 2013. "Post-Crisis Capital Account Regulation in South Korea and South Africa," Working Papers wp320, Political Economy Research Institute, University of Massachusetts at Amherst.
    12. Pierre-Guillaume Méon & Khalid Sekkat, 2013. "The Formal and Informal Framework of Foreign Direct Investment," Working Papers 810, Economic Research Forum, revised Dec 2013.
    13. Hanan Aboel Farag & Mohamed Sayed Abed, 2017. "The Impact of Foreign Capital Inflows on Economic Growth and Employment in Egypt: A Sectoral Empirical Analysis," Working Papers 1152, Economic Research Forum, revised 11 Sep 2003.
    14. Philipp Harms & Pierre†Guillaume Méon, 2018. "Good and useless FDI: The growth effects of greenfield investment and mergers and acquisitions," Review of International Economics, Wiley Blackwell, vol. 26(1), pages 37-59, February.
    15. Kevin Gallagher, 2012. "The Myth of Financial Protectionism: The New (and old) Economics of Capital Controls," Working Papers wp278, Political Economy Research Institute, University of Massachusetts at Amherst.
    16. Söylemez, Arif Orçun & Yılmaz, Ahmet, 2012. "Türkiye Ekonomisinde Finansal Serbestleşme Döneminde Uluslararası Sermaye Girişi - Büyüme İlişkisi [The Relationship Between the International Capital Flows and Economic Growth After the Financial ," MPRA Paper 52271, University Library of Munich, Germany.

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