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The Liberalization of Capital Outflows in CIBS: What Opportunities for Other Developing Countries?

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  • Gottschalk, Ricardo
  • Azevedo Sodre, Cecilia

Abstract

This paper examines the implications of the liberalization of capital outflows in China, India, Brazil, and South Africa (CIBS) for other developing countries. It focuses on their prospects of attracting not only foreign direct investment (FDI), but also portfolio capital flows from CIBS. To inform the discussion, two steps are taken: first, in order to identify the type of capital flows that might come from CIBS, the paper briefly describes capital account liberalization measures undertaken by CIBS to date and future intended liberalization. Second, it maps geographic distribution of outward FDI and foreign portfolio investment in the recent past, which are taken as possible predictors of future flows. The paper shows that portfolio investment goes mainly to OECD countries and offshore financial centres, and only a small share to developing countries. But, within developing countries, CIBS? neighbouring countries have shown a greater ability to attract this type of investment, compared with other developing countries.

Suggested Citation

  • Gottschalk, Ricardo & Azevedo Sodre, Cecilia, 2008. "The Liberalization of Capital Outflows in CIBS: What Opportunities for Other Developing Countries?," WIDER Working Paper Series 068, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:rp2008-68
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    References listed on IDEAS

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    1. Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2007. "The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970-2004," Journal of International Economics, Elsevier, vol. 73(2), pages 223-250, November.
    2. Philip R. Lane & Sergio L. Schmukler, 2006. "The international financial integration of China and India," Proceedings, Federal Reserve Bank of San Francisco, issue Jun.
    3. L. Alan Winters & Shahid Yusuf, 2007. "Dancing with the Giants: China, India, and the Global Economy," World Bank Publications, The World Bank, number 6632, August.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    capital account liberalization; FDI; portfolio capital flows; south?south capital flows; developing countries;

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