Capital Flows to Least Developed Countries: What Matters?

Bangladesh Development Studies, 2015, vol. 38, issue 2, 95-113

Abstract: This paper analyses determinants and persistency of capital flows (foreign direct investment, debt and official aid) to least developed countries (LDCs) for the period 1991 - 2012. The results indicate that capital flows to LDCs, particularly FDI and external debt, are associated with various factors, such as macroeconomic stability, financial sector development, trade openness, natural resource abundance and political environment. However, the determinants of capital flows vary significantly across regions. While FDIs are of natural resource seeking type in Africa, it is mostly efficiency seeking in Asia. The results suggest for appropriate policies aimed at improving macroeconomic and financial environment along with political stability in order to ensure more capital flows to LDCs.

Keywords: Capital Flows; LDCs; GMM Estimator; BPoA; IPoA (search for similar items in EconPapers)
JEL-codes: E44 F20 F34 (search for similar items in EconPapers)
Date: 2015
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Related works:
Working Paper: Capital Flows to Least Developed Countries: What Matters? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:badest:0783

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