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Time-Series Econometrics of the Real and Financial Effects of Capital Flows: Selected Cases in Africa and Southern Asia

  • J Benson Durham

Few studies address the real effects of international capital flows. Instead of a cross-sectional design, this study exclusively examines time-series data from nine countries. Four cases - Nigeria, Zimbabwe, India, and Pakistan - produce evidence that either FDI or FPI adversely affect growth or savings rates, while two cases produce some evidence of a benevolent effect - Uganda and Sri Lanka. The data for Kenya, Zambia, and Bangladesh largely produce ambiguous results, and in fact, the vast majority of models across all cases indicate no significant relation. The preponderance of negative effects is largely consistent with the notion that lower income countries lack sufficient 'absorptive capacity' to harness foreign investment.

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File URL: http://www3.qeh.ox.ac.uk/RePEc/qeh/qehwps/qehwps56.pdf
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Paper provided by Queen Elizabeth House, University of Oxford in its series QEH Working Papers with number qehwps56.

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Handle: RePEc:qeh:qehwps:qehwps56
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  1. Levine, Ross & Zervos, Sara, 1998. "Stock Markets, Banks, and Economic Growth," American Economic Review, American Economic Association, vol. 88(3), pages 537-58, June.
  2. Geert Bekaert & Campbell R. Harvey, 1997. "Foreign Speculators and Emerging Equity Markets," William Davidson Institute Working Papers Series 79, William Davidson Institute at the University of Michigan.
  3. Stanley Fischer, 1999. "On the Need for an International Lender of Last Resort," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 85-104, Fall.
  4. Peter Blair Henry, 2000. "Stock Market Liberalization, Economic Reform, and Emerging Market Equity Prices," Journal of Finance, American Finance Association, vol. 55(2), pages 529-564, 04.
  5. Henry, Peter Blair, 2000. "Do stock market liberalizations cause investment booms?," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 301-334.
  6. Kenneth Rogoff, 1999. "International Institutions for Reducing Global Financial Instability," NBER Working Papers 7265, National Bureau of Economic Research, Inc.
  7. J Benson Durham, . "Econometrics of the Real Effects of Cross-Border Capital Flows in Emerging Markets," QEH Working Papers qehwps52, Queen Elizabeth House, University of Oxford.
  8. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
  9. Takatoshi Ito, 1999. "Capital Flows in Asia," Discussion Paper Series a371, Institute of Economic Research, Hitotsubashi University.
    • Takatoshi Ito, 2000. "Capital Flows in Asia," NBER Chapters, in: Capital Flows and the Emerging Economies: Theory, Evidence, and Controversies, pages 255-296 National Bureau of Economic Research, Inc.
  10. J Benson Durham, . "Econometrics of the Effects of Stock Market Development on Growth and Private Investment in Lower Income Countries," QEH Working Papers qehwps53, Queen Elizabeth House, University of Oxford.
  11. Geert Bekaert & Campbell R. Harvey, 1998. "Capital Flows and the Behavior of Emerging Market Equity Returns," NBER Working Papers 6669, National Bureau of Economic Research, Inc.
  12. V N Balasubramanyam & M Salisu & David Sapsford., . "Foreign Direct Investment and Growth in EP and IS Countries," Working Papers ec18/94, Department of Economics, University of Lancaster.
  13. Magnus Blomstrom & Robert E. Lipsey & Mario Zejan, 1992. "What Explains Developing Country Growth?," NBER Working Papers 4132, National Bureau of Economic Research, Inc.
  14. Xavier X. Sala-i-Martin, 1997. "I Just Ran Four Million Regressions," NBER Working Papers 6252, National Bureau of Economic Research, Inc.
  15. Fischer, S. & Cooper, R.N. & Dornbusch, R. & Garber, P.M. & Massad, C. & Polak, J.J. & Rodrik, D. & Tarapore, S.S., 1998. "Should the IMF Pursue Capital-Account Convertibility?," Princeton Essays in International Economics 207, International Economics Section, Departement of Economics Princeton University,.
  16. Sebastian Edwards, 1995. "Why are Saving Rates so Different Across Countries?: An International Comparative Analysis," NBER Working Papers 5097, National Bureau of Economic Research, Inc.
  17. Adam, Christopher, 1999. "Financial Liberalisation and Currency Demand in Zambia," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(3), pages 268-306, October.
  18. J Benson Durham, . "Emerging Stock Market Liberalisation, Total Returns, and Real Effects: Some Sensitivity Analyses," QEH Working Papers qehwps51, Queen Elizabeth House, University of Oxford.
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