Capital flows: Catalyst or Hindrance to economic takeoffs?
This paper applies a probit estimation to assess the relationship between economic takeoffs during 1950-2000 and inflows of portfolio debt, portfolio equity, and FDI, controlling for countryâ€™s stock of short-termexternal debt and commodity terms of trade. Average level of FDI inflows is associated with a 23 percenthigher takeoff probability relative to a zero FDI inflow benchmark, and this effect is highest for the LatinAmerica subsample, with a 65 rise in takeoff probability. Higher stock of short term external debt hasbeen associated with a substantial negative effect on the probability of a takeoff, and the effect of theshort terms debt overhang is largest for Latin American countries. Yet, virtually all the takeoffs wereassociated with a rise in portfolio debt inflows. At the sample mean, inflow of portfolio debt is associatedwith approximately 25 percent higher probability of a takeoff. In contrast, a one standard deviationincrease in equity outflows (inflows) is associated with a 47 percent (17 percent) decline in the probabilityof a takeoff. A one standard deviation improvement in commodity terms of trade is associated with 28percent higher takeoff probability.
|Date of creation:||05 Jul 2011|
|Contact details of provider:|| Postal: Santa Cruz, CA 95064|
Phone: (831) 459-2743
Fax: (831) 459-5077
Web page: http://www.escholarship.org/repec/ucscecon/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Luca Antonio Ricci & Gian Maria Milesi‐Ferretti & Jaewoo Lee, 2013.
"Real Exchange Rates and Fundamentals: A Cross‐Country Perspective,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 45(5), pages 845-865, 08.
- Luca A Ricci & Jaewoo Lee & Gian M Milesi-Ferretti, 2008. "Real Exchange Rates and Fundamentals; A Cross-Country Perspective," IMF Working Papers 08/13, .
- Eswar S. Prasad & Raghuram G. Rajan & Arvind Subramanian, 2007.
"Foreign Capital and Economic Growth,"
Brookings Papers on Economic Activity,
Economic Studies Program, The Brookings Institution, vol. 38(1), pages 153-230.
- Prasad, Eswar & Rajan, Raghuram G. & Subramanian, Arvind, 2007. "Foreign Capital and Economic Growth," IZA Discussion Papers 3186, Institute for the Study of Labor (IZA).
- Eswar S. Prasad & Raghuram G. Rajan & Arvind Subramanian, 2007. "Foreign Capital and Economic Growth," NBER Working Papers 13619, National Bureau of Economic Research, Inc.
- Dollar, David & Kraay, Aart, 2001.
"Trade, growth, and poverty,"
Policy Research Working Paper Series
2615, The World Bank.
- Joseph Joyce, 2011. "Financial Globalization and Banking Crises in Emerging Markets," Open Economies Review, Springer, vol. 22(5), pages 875-895, November.
- International Monetary Fund, 2009. "Commodity Terms of Trade; The History of Booms and Busts," IMF Working Papers 09/205, .
- Benjamin F. Jones & Benjamin A. Olken, 2005. "Do Leaders Matter? National Leadership and Growth Since World War II," The Quarterly Journal of Economics, Oxford University Press, vol. 120(3), pages 835-864.
When requesting a correction, please mention this item's handle: RePEc:cdl:ucscec:qt79f5144f. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.