Private Capital Flows to Low Income Countries: Country-Specific Effects and the Lucas Paradox
43 Pages Posted: 24 Mar 2010
Date Written: January 15, 2010
This paper analyses Net Private Capital Flows to LICs incorporating the recent surge in FDI between 2000 and 2006. We show that including country-specific effects in a paneldata setup resolves the Lucas Paradox, at least for LICs. Our results suggest that openness is among the most important factors explaining country-specific performance in attracting Net Private Capital Flows.
Suggested Citation: Suggested Citation