The main goal of this paper is to show that organizations and institutions play a relevant role in the economic growth process, both directly and indirectly. Human capital plays a direct role by facilitating the introduction and use of new technologies. A more indirect role is play by entrepreneurial activity in three ways: 1) supplying monetary funds; 2) creating an adequate social climate and 3) encouraging trust in the society. The hypotheses introduced are tested using the data on eleven countries.

Policy makers have traditionally considered the macroeconomic relations and the variables that can affect the economic objectives that they pursue, s~uch as prices, employment, balance of payments, and economic growth. Recently, microeconomic behavior has also been considered. To complete the analysis, it is necessar'y to include those variables that define the firm's evolution and activities, and cash flow could be this kind of variable to be included in the analysis. The main objective of this paper is to show the relationship between cash flow and one of the final economic policy targets, economic growth. This paper considers the relationship between cash flow and applied economics, then develops the effects of cash flow on economic growth. (JEL: 040) GALIINDO AI~D MENDEZ: CASH FLOW EFFECTS