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Where does Capital Flow? A Comparison of U.S. States and EU Countries 1950-2000

  • Sebnem Kalemli-Ozcan
  • Bent E. Sorensen
  • Belgi Turan

We find that the United States in the 1950s and 1960s was characterized by strong "catch-up growth" in the south with capital owing from rich northern states to poorer southern states - consistent with the predictions of the simple neoclassical model. After the 1970s, "catch-up growth" is mainly over in the United States and capital is owing to productive (rich) states. For Europe, we find that capital has been owing from the richer countries to the poorer countries since the 1970s with no signs yet of the "catch-up" phase having run its course, except for the country of Ireland.

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Paper provided by Directorate General Economic and Financial Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 295.

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Length: 31 pages
Date of creation: Dec 2007
Date of revision:
Handle: RePEc:euf:ecopap:0295
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  1. Laura Alfaro & Sebnem Kalemli-Ozcan & Vadym Volosovych, 2005. "Why Doesn't Capital Flow from Rich to Poor Countries? An Empirical Investigation," NBER Working Papers 11901, National Bureau of Economic Research, Inc.
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