Taxing capital flows: an empirical comparative analysis

Soto, Marcelo

doi:10.1016/s0304-3878(03)00074-9

Cited by 32 publications

(23 citation statements)

References 28 publications

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“…In contrast, the argument implicitly assumes poor (or developing) countries do not have well-developed financial institutions to deal with huge amounts of FDI inflows. In this situation, FDI may eventually hurt more than help (Soto 2003). Table 2 shows estimates of first three conditioning information sets whereas Table 3 reports estimates of all four conditioning information sets (that is, after including investment variable).…”

Section: Fdi Financial Development and The Stages Of Economic Develmentioning

confidence: 99%

Does domestic financial development enhance the linkages between foreign direct investment and economic growth?

Choong

2011

Empir Econ

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The study examines the relationship between foreign direct investment (FDI), financial development, and economic growth in a panel of 95 developed and developing countries from 1983 to 2006. The study moves away from the traditional cross-sectional analysis, and focuses on more direct evidence of the channels via which FDI might help or retard economic growth. Using generalized method of moment (GMM) panel data analysis, we find strong evidence of a positive relationship between FDI inflows into a country and its economic performance. We also find evidence that domestic financial system is a significant prerequisite for FDI to have a positive effect on economic growth. Policy implications are clear. Effort should be made to reform and improve the development of domestic financial system in order to benefit more from the presence of FDI.

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Section: Fdi Financial Development and The Stages Of Economic Develmentioning

confidence: 99%

Does domestic financial development enhance the linkages between foreign direct investment and economic growth?

Choong

2011

Empir Econ

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“…Furthermore, empirical evidence on the growth benefit of financial globalization and the associated foreign capital inflows [e.g. foreign direct investment (FDI)] also fails to provide conclusive evidence of its benefits (Soto, ; Carkovic and Levine, ; Kose et al ., ) . This might be due to the notion that certain threshold conditions should be satisfied before any growth benefits can be accrued from foreign capital inflows (Durham, ; Kose et al ., ; ).…”

Section: Introductionmentioning

confidence: 99%

“…Furthermore, empirical evidence on the growth benefit of financial globalization and the associated foreign capital inflows [e.g. foreign direct investment (FDI)] also fails to provide conclusive evidence of its benefits (Soto, 2003;Carkovic and Levine, 2005;Kose et al, 2009). 3 This might be due to the notion that certain threshold conditions should be satisfied before any growth benefits can be accrued from foreign capital inflows (Durham, structural characteristics such as human capital, local financial development, macroeconomic policy, economic freedom (EF) and regulation to explain the inconclusive evidence on the capital flow-growth nexus.…”

Section: Introductionmentioning

confidence: 99%

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Capital Inflows and Economic Growth: Does the Role of Institutions Matter?

2015

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Recent evidence shows that institutions figure prominently in explaining the 'Lucas paradox'. Using a threshold regression model, we extend this evidence to a situation where institutions index the relationship between foreign capital inflows and economic growth. We find strong and robust evidence that portfolio equity (including foreign direct investment) and debt inflows have positive effects on growth only in countries with high-quality institutions. Countries that fall below the threshold level of institutional quality record either insignificant or negative effects. This paper provides a possible explanation on the so-called Lucas paradox.

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“…In recent years, there has been a revival of interest on the nature and role of private capital flows and their impact on investment and economic growth of host countries (Andersen and Tarp 2003;Albuquerque 2003;Soto 2003;Mody and Murshid 2005;Giovanni 2005;Khamfula 2007;Pazienza and Vecchione 2009;Tvaronavičienė et al 2008;Tvaronavičienė and Kalašinskaitė 2010;Weng et al 2010). In developing countries, this interest has been fueled by the reappearance of huge private capital inflows since the early 1990s, through a process of rapid financial sector liberalization (Blejer 2006;Bordo and Meissner 2006;Eller et al 2006).…”

Section: Introductionmentioning

confidence: 99%

Private Capital Flows to Low‐income Countries: The Role of Domestic Financial Sector

Choong

Lam

Yusop

2010

Journal of Business Economics and Management

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Abstract.The relationship between private capital flows and growth has been examined extensively in the literature, yet numerous controversies still remain. The study examines the relationships among private capital flows (foreign direct investment, portfolio investment and foreign debt), financial development and economic performance in a sample of 16 low-income developing countries over the period 1988-2006, by employing generalized method of moments (GMM) panel data analysis. We find that private capital flows have a positive impact on growth in low-income countries with well-developed financial sector but have a negative effect in the presence of poor financial sector development. Well-developed financial sectors are ones that are themselves crucial for economic growth. Our results indicate that private capital flows would be more effective if they were more systematically conditional on well-developed financial systems.

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Taxing capital flows: an empirical comparative analysis

Cited by 32 publications

References 28 publications

Does domestic financial development enhance the linkages between foreign direct investment and economic growth?

Does domestic financial development enhance the linkages between foreign direct investment and economic growth?

Capital Inflows and Economic Growth: Does the Role of Institutions Matter?

Private Capital Flows to Low‐income Countries: The Role of Domestic Financial Sector

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