Working Paper: CEPR ID: DP17656
Authors: Fernando Broner; Tatiana Didier; Sergio Schmukler; Goetz von Peter
Abstract: Using country-to-country data, this paper documents a set of novel stylized facts about the rise of the South in global finance. The paper assembles comprehensive bilateral data on cross-border bank loans and deposits, portfolio investment in debt and equity, foreign direct investment, and international reserves. The main findings are that investments involving the South, and especially within the South, have grown faster than those within the North between 2001 and 2018. By 2018, the South was involved in 34% of total international investments. The largest increases occurred in portfolio investment and international reserves, the smallest in banking. These trends are observed across South regions, are not driven by China, and are reinforced when taking offshore finance into account. South-to-South investments tended to grow the fastest, even after controlling for regional GDP growth. The extensive margin increased significantly within the South, accounting for a sizable share of international investments by 2018
Keywords: International Banking; Foreign Direct Investment; International Capital Flows; International Financial Integration; Emerging Economies; Portfolio Investments
JEL Codes: F21; F36; G15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased bilateral links (F69) | interconnectedness among south countries (O54) |
| south investments (N91) | growth rate of south-to-south investments (F21) |
| north investments (G31) | growth rate of north-to-north investments (F29) |
| south-to-south investments (F21) | total international investments (F21) |
| integration of the south (F15) | integration of the north (F02) |
| south (R11) | source and destination of investments (F21) |