Working Paper: CEPR ID: DP2583
Authors: Philip Lane; Gian Maria Milesi-Ferretti
Abstract: Recent years have witnessed a change in the composition of capital flows to developing countries, and FDI and equity flows have been playing an increasing role. In this paper we discuss the challenges for international macroeconomics that these developments pose and characterize stylized facts associated with the structure of external liabilities in developing countries, focusing in particular on FDI and equity stocks.
Keywords: external debt; foreign direct investment; net foreign assets; portfolio equity
JEL Codes: F21; F34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Income per capita (D31) | Net foreign assets (F21) |
| Income per capita (D31) | Creditors (F34) |
| Trade openness (F43) | Gross external liabilities (F65) |
| Financial development (O16) | Foreign direct investment (FDI) (F21) |
| Natural resources (Q30) | Foreign direct investment (FDI) (F21) |
| Privatization programs (L33) | Foreign direct investment (FDI) (F21) |
| Equity financing (G32) | Risk-sharing properties during economic downturns (E44) |