Why doesn't capital flow from rich to poor countries? An empirical investigation

• 成果类型: Article
• 署名作者: Alfaro, Laura; Kalemh-Ozcan, Sebnem; Volosovych, Vadym
• 署名单位: Harvard University; University of Houston System; University of Houston; National Bureau of Economic Research; State University System of Florida; Florida Atlantic University
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/rest.90.2.347
• 发表日期: 2008-05
• 页码: 347-368
• 关键词: economic-growth; determinants; industrial; geography; WEALTH; TRADE; BIAS

摘要

We examine the empirical role of different explanations for the lack of capital flows from rich to poor countries-the Lucas Paradox. The theoretical explanations include cross-country differences in fundamentals affecting productivity, and capital market imperfections. We show that during 1970-2000, low institutional quality is the leading explanation. Improving Peru's institutional quality to Australia's level implies a quadrupling of foreign investment. Recent studies emphasize the role of institutions for achieving higher levels of income but remain silent on the specific mechanisms. Our results indicate that foreign investment might be a channel through which institutions affect long-run development.