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Flowing Together or Flowing Apart: An Analysis of the Relation between FDI and ODA Flows to Argentina and Brazil

  • Carro, Martha
  • Larrú, José María

The analysis of the relationship between ODA and capital flows is scarce and has provided cross-country ambiguous results. The purpose of our study is to explore the relation between FDI and ODA for Argentina and Brazil. We have divided the analysis into the macro and the micro approach. From the macro perspective, we analyze the volatility and cyclical aspects of both flows. We also study if they buffer GDP’s shocks. We find that aid is more stable than FDI… At micro level, we look for structural relations by analyzing sectorial destination of both flows. We find that the main foreign direct investors are also the main donors but no systematic relation emerge between FDI and ODA flows, except for the Japanese case in Brazil.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 25064.

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Date of creation: Sep 2010
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Handle: RePEc:pra:mprapa:25064
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  4. Reinhart, Carmen & Reinhart, Vincent, 1998. "“Some Lessons for Policy Makers Who Deal with the Mixed Blessing of Capital Inflows,”," MPRA Paper 7123, University Library of Munich, Germany.
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  7. Kosack, Stephen & Tobin, Jennifer, 2006. "Funding Self-Sustaining Development: The Role of Aid, FDI and Government in Economic Success," International Organization, Cambridge University Press, vol. 60(01), pages 205-243, January.
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  12. Agenor, Pierre-Richard & Bayraktar, Nihal & El Aynaoui, Karim, 2005. "Roads out of poverty? assessing the links between aid, public investment, growth, and poverty reduction," Policy Research Working Paper Series 3490, The World Bank.
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  14. Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1994. "The capital inflows problem: Concepts and issues," MPRA Paper 13902, University Library of Munich, Germany.
  15. Yilmaz AKYÜZ & Andrew CORNFORD, 1999. "Capital Flows To Developing Countries And The Reform Of The International Financial System," UNCTAD Discussion Papers 143, United Nations Conference on Trade and Development.
  16. Claessens, Stijn & Dooley, Michael P & Warner, Andrew, 1995. "Portfolio Capital Flows: Hot or Cold?," World Bank Economic Review, World Bank Group, vol. 9(1), pages 153-74, January.
  17. Abdiweli Ali & Hodan Isse, 2006. "An Empirical Analysis of the Determinants of Foreign Aid: A Panel Approach," International Advances in Economic Research, International Atlantic Economic Society, vol. 12(2), pages 241-250, May.
  18. Emmanuel Frot & Javier Santiso, 2008. "Development Aid and Portfolio Funds: Trends, Volatility and Fragmentation," OECD Development Centre Working Papers 275, OECD Publishing.
  19. Severine Blaise, 2005. "On the link between Japanese ODA and FDI in China: a microeconomic evaluation using conditional logit analysis," Applied Economics, Taylor & Francis Journals, vol. 37(1), pages 51-55.
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