Foreign Capital in Developing Economies: Perspectives from the Theory of Economic Growth - Hardcover

This volume evaluates the pattern and the function of foreign capital in developing countries in a long-run perspective. The main conceptual instruments employed are the theory of economic growth and the techniques associated with recent advances in growth econometrics. Empirical work points out that there is no mechanical trade-off between the short-term dangers and the long-run gains from capital market integration, but growth benefits of foreign capital in transforming economies are conditional on an effective destination of the resources. Over-borrowing and excessive consumption are the main pitfalls in the short-run as in the long-run. Nevertheless, foreign capital can be conducive of faster growth and possibly higher welfare.