Capital Flows in a Globalized World

Laura Alfaro, Sebnem Kalemli-Ozcan and Vadym Volosovych

in Capital Controls and Capital Flows in Emerging Economies

Published by University of Chicago Press

Published in print May 2007 | ISBN: 9780226184975
Published online February 2013 | e-ISBN: 9780226184999 | DOI:
Capital Flows in a Globalized World

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This chapter investigates the patterns of international capital flows using data for 1970–2000. The data reveals that the quality of institutions plays an important role in explaining the direction and magnitude of capital flows in the 1970–2000 period. It also indicates that the quality of institutions and economic policy have contributed in the determination of the (relatively) high degree of capital flow volatility to the emerging markets in the 1970–2000 period. In addition, it shows that, despite the dramatic increase in capital flows, most capital flows to rich countries. A country that enhances institutions, decreases capital controls, and increases its growth is going to receive more capital inflows. Historical legal origins have a direct effect on capital inflows during the period 1970–2000.

Keywords: international capital flows; institutions; economic policy; capital flow volatility; markets; capital controls; capital inflows

Chapter.  20203 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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