World Bank - Development Research Group (DECRG)
World Bank - Research Department
World Bank - Office of the Chief Economist
Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)
MIT Dept. of Economics Working Paper No. 00-16; World Bank Policy Research Working Paper No. 3320
Capital flows to developing countries are small and mostly take the form of loans rather than direct foreign investment. Kraay, Loayza, and Serven build a simple model of North-South capital flows that highlights the interplay between diminishing returns, production risk, and sovereign risk. The model generates a set of country portfolios and a world distribution of capital stocks that resemble those in the data.
This paper - a product of Investment Climate, Development Research Group - is part of a larger effort in the group to study international capital flows.
Number of Pages in PDF File: 44
JEL Classification: F32, F34working papers series
Date posted: October 29, 2004
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