Return to Capital and Foreign Direct Investment: A Cross-Country Perspective

John Vahaly, Nan-Ting Chou, Alexei Izyumov
2018 International Journal of Business and Social Science  
Using newly available data, the paper estimates aggregate macroeconomic rates of return (ROR) for 109 countries divided into highly developed (HDC), less developed (LDC), and transition economy (TEC) groups. We then analyze the connection between the ROR and cross-country capital flows as measured by foreign direct investment (FDI). For the period of 1994-2014, we find statistically significant links between all measures of ROR and inflows of FDI associated with the prevalence of "downhill"
more » ... e of "downhill" capital flows across the world. JEL classifications: E22, E25, F21
doi:10.30845/ijbss.v9n11p1 fatcat:wpvh7fhi45cijipjlk7jxhb3hi