Capital flows and endogenous growth

Arbeitspapier

So-called "uphill capital flows", i.e. flows of physical capital from relatively poor to rich countries, are a new phenomenon with yet unclear impact. We develop a unified framework incorporating economic institutions, human capital and physical capital to study the interaction of international capital flows and growth. Analytically, we study conditions under which a positive change of a country's economic institutions can attract inflows of physical capital from abroad, leading to long-term growth via the accumulation of human capital. Our mechanism shows how a small initial difference in the level of institutions can lead to substantial divergence in income over time. We derive conditions under which a country receives inflows of capital over time and increases its investment in human capital. Finally, we provide simulations to illustrate our results.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economics Working Paper Series ; No. 21/365

Classification and Topics

• Classification: Wirtschaft ; Institutions and the Macroeconomy ; International Investment; Long-term Capital Movements ; Economic Growth of Open Economies ; One, Two, and Multisector Growth Models ; Institutions and Growth
• Subject: Growth ; International Capital Flows ; Inequality ; Institutions ; Human Capital

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Komarov, Evgenij
• Event: Veröffentlichung
• (who): ETH Zurich, CER-ETH - Center of Economic Research
• (where): Zurich
• (when): 2021

Further information

• DOI: doi:10.3929/ethz-b-000516401
• Handle: http://hdl.handle.net/10419/248426
• Last update: 10.03.2025, 11:45 AM CET