Foreign Capital In Developing Economies : Perspectives From the Theory of Economic Growth

The object of this volume is to evaluate the pattern and the function of foreign capital in developing countries in a long-run perspective. The main conceptual instruments employed are the theory of economic growth, and the techniques associated with recent advances in growth econometrics. This empirical work points out that there is no mechanical trade-off between the short-term dangers and the long-run gains from capital market integration, but the growth benefits of foreign capital in transforming economies are conditional on an effective destination of the resources. Over-borrowing and excessive consumption are the main pitfalls in the short- as in the long-run. Nevertheless, foreign capital can be conducive to faster growth and possibly higher welfare. Front Matter....Pages i-xviii Front Matter....Pages 1-1 Introduction: A Growth-theory Approach to Capital Flows in Developing Countries....Pages 3-9 Recovery, Insolvency and Stagnation: The Flow of Foreign Capital to Developing Economies in Historical Perspective....Pages 10-30 Front Matter....Pages 31-31 Growth Theory and the Determinants of Capital Flows....Pages 33-53 Growth Theory and the Effects of Capital Flows....Pages 54-76 Front Matter....Pages 77-77 Measuring Capital Mobility in Developing Economies....Pages 79-104 Determinants of Net Capital Flows in Developing Countries....Pages 105-132 Capital Movements, Economic Growth and Investment in Developing Countries....Pages 133-152 External Finance and Foreign Debt: A Study of the Transition Economies of Central and Eastern Europe....Pages 153-178 Back Matter....Pages 179-199 This volume evaluates the pattern and the function of foreign capital in developing countries in a long-run perspective. The main conceptual instruments employed are the theory of economic growth and the techniques associated with growth econometrics. Empirical work points out that there is no mechanical trade-off between the short-term dangers and the long-run gains from capital market integration, but growth benefits of foreign capital in transforming economies are conditional on an effective destination of the resources.