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Private Capital Inflows and the Role of Economic Fundamentals

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  • Vittorio Corbo
  • Leonardo Hernández

Abstract

Private capital flows returned to the developing countries in the late 1980s, only a few years after the debt crisis. Underlying this surge in inflows there is a decrease in interest rates and a slowdown in economic activity in the developed countries, and an improvement in economic prospects and creditworthiness in the recipient countries. The latter is due, in part, to the implementation of structural reforms comprising the deregulation of financial and labor markets, the dismantling of barriers to trade, and the reduction of restrictions on capital movements.

Suggested Citation

  • Vittorio Corbo & Leonardo Hernández, 1998. "Private Capital Inflows and the Role of Economic Fundamentals," Working Papers Central Bank of Chile 45, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:45
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    File URL: https://www.bcentral.cl/documents/33528/133326/DTBC_45.pdf
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    References listed on IDEAS

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    1. Corbo, Vittorio & Fischer, Stanley, 1995. "Structural adjustment, stabilization and policy reform: Domestic and international finance," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 44, pages 2845-2924, Elsevier.
    2. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1993. "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 108-151, March.
    3. Chuhan, Punam & Claessens,Constantijn A. & Mamingi,, 1993. "Equity and bond flows to Asia and Latin America : the role of global and country factors," Policy Research Working Paper Series 1160, The World Bank.
    4. Edwards, Sebastian, 1993. "Openness, Trade Liberalization, and Growth in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1358-1393, September.
    5. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 485-512, December.
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    Cited by:

    1. Sayari, Naz & Sari, Ramazan & Hammoudeh, Shawkat, 2018. "The impact of value added components of GDP and FDI on economic freedom in Europe," Economic Systems, Elsevier, vol. 42(2), pages 282-294.

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