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Corporate Governance and Private Capital Flows to Latin America

  • Alejandro Izquierdo
  • Alejandro Micco
  • Ugo Panizza
  • Alberto E. Chong

According to recent research, external factors and political governance considerations are key determinants of capital flows in Latin America. We postulate that corporate governance is a crucial determinant as well. We show that while the region is characterized by relatively low levels of corporate governance it shows highly volatile capital flows. The high level of economic volatility that characterizes the region is partly due to the behavior of capital flows which, in turn, are influenced by external factors. The paper shows that by implementing better corporate governance the region could reduce the sensitivity of capital flows to external shocks and hence reduce the volatility of its economy.

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Paper provided by Inter-American Development Bank in its series IDB Publications (Working Papers) with number 6505.

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Date of creation: Feb 2003
Date of revision:
Handle: RePEc:idb:brikps:6505
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  1. Leonardo Leiderman & Carmen Reinhart & Guillermo Calvo, 1992. "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," IMF Working Papers 92/62, International Monetary Fund.
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  14. Fernandez-Arias, Eduardo & DEC, 1994. "The new wave of private capital inflows : push or pull?," Policy Research Working Paper Series 1312, The World Bank.
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  18. repec:tpr:qjecon:v:118:y:2003:i:1:p:107-155 is not listed on IDEAS
  19. Shang-Jin Wei & Yi Wu, 2001. "Negative Alchemy? Corruption, Composition of Capital Flows, and Currency Crises," NBER Working Papers 8187, National Bureau of Economic Research, Inc.
  20. Ugo Panizza, 2001. "Electoral Rules, Political Systems, and Institutional Quality," Economics and Politics, Wiley Blackwell, vol. 13(3), pages 311-342, November.
  21. Alejandro Izquierdo, 2002. "Sudden Stops, the Real Exchange Rate and Fiscal Sustainability in Argentina," The World Economy, Wiley Blackwell, vol. 25(7), pages 903-923, 07.
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