Please use this identifier to cite or link to this item: http://buratest.brunel.ac.uk/handle/2438/3519
Title: Foreign capital in a growth model
Authors: Mallick, S
Moore, T
Keywords: Endogenous growth; Developing countries; FDI (foreign direct investment); ODA (official development assistance); GMM
Issue Date: 2007
Publisher: Brunel University
Citation: Economics and Finance Discussion Papers, Brunel University, 07-23.
Abstract: Within an endogenous growth framework, this paper empirically investigates the impact of financial capital on economic growth for a panel of 60 developing countries, through the channel of domestic capital formation. By estimating the model for different income groups, it is found that while private FDI flows exert beneficial complementarity effects on the domestic capital formation across all income-group countries, the official financial flows contribute to increasing investment in the middle income economies, but not in the low income countries. The latter appears to demonstrate that the aid-growth nexus is supported in the middle income countries, whereas the misallocation of official inflows is more likely to exist in the low income countries, suggesting that aid effectiveness remains conditional on the domestic policy environment.
URI: http://bura.brunel.ac.uk/handle/2438/3519
Appears in Collections:Economics and Finance
Dept of Economics and Finance Research Papers

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