What Makes Developing Asia Resilient in a Financially Globalized World?

Abstract

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International Capital Flows and the Cryptocurrency Effect

“…By contrast, inflation and real exchange rate variability affect international capital flows in a negative manner. In terms of the FDI flows, the results are consistent with those provided by IMF (2007), Ito et al (2009) and Wei (2011). All the relevant diagnostics are reported at the bottom of Table 3.…”

“…Per capita income is expected to increase the size of capital inflows (Broner and Rigobon, 2005), in contrary to expectations, we find a negative relationship, however the connection is insignificant. On the other hand, trade openness increases the size of FDI inflows (Ito et al, 2009;Wei, 2011) and there is also the reverse effect of FDI and openness. Countries that rely heavily on international trade tend to be more vulnerable to changes in global investment conditions, especially for economies where foreign investments are mainly directed to the export sectors.…”

“…Coming to the effect of both FDI and trade openness on capital inflows, Ito et al (2009); Wei (2011) and Liargovas (2012) argue that trade openness has a positive effect on FDI inflows in developing countries (Liargovas, 2012). Moreover, Aghion et al (2004) and Broto et al (2008) find an 'inverted-U-shaped' relation between FDI volatility and GDP per capita, indicating that average-income countries have less FDI volatility.…”

What Drives Different Types of Capital Flows and Their Volatilities in Developing Asia?

“…Empirical findings (Carlson and Hernandez 2002;Cavoli and Rajan 2009;Chuhan, Perez-Quiros, and Popper 1996) show that FDI is the least volatile type of financial flow when taking into account the average size of the flows. Studies also show that FDI remains most stable during episodes of financial crisis and is less associated with output volatility (Ito, Jongwanich, and Terada-Hagiwara 2009). Following FDI is foreign portfolio investment, although such flows are often procyclical.…”

Threshold Effect of Financial Integration on Linkages Between Monetary Independence and Foreign Exchange Reserves

“…The differences in the estimations are not entirely surprising as the de facto and de jure measurement of financial integration measures different aspects of financial integration (Ito, Jongwanich, & Terada-Hagiwara, 2009). Moreover, each indicator subjects to its own weaknesses and strength (Ito et al, 2009;Quinn, Schindler, & Toyoda, 2011). It is therefore impossible to justify which outputs provide the most accurate findings.…”