Country Portfolios

Capital flows to developing countries are small and take mostly the form of loans rather than direct foreign investment. We build a simple model of North-South capital flows that highlights the interplay between diminishing returns, production risk...

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Bibliographic Details
Main Authors:	Kraay, Aart, Loayza, Norman, Servén, Luis, Ventura, Jaume
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, D.C. 2013
Subjects:	CAPITAL FLOW DEVELOPING COUNTRIES LOANS FOREIGN INVESTMENT CAPITAL STOCKS LENDING IMPORTS POOR COMMUNITIES HUMAN CAPITAL TECHNOLOGY GROSS DOMESTIC PRODUCT ASSET PRICES ASSETS ASYMMETRIC INFORMATION BENCHMARK BONDS BORROWING CAPITAL FLOWS DEBT DIMINISHING RETURNS DISTRIBUTION OF WEALTH EQUALIZATION EQUATIONS EQUILIBRIUM EXPECTED RETURN EXPECTED VALUE EXPROPRIATION EXTERNALITY FINANCIAL MARKETS FINANCIAL TRANSACTIONS FOREIGN ASSETS FOREIGN DIRECT INVESTMENT FOREIGN INVESTORS GDP INCOME INEFFICIENCY INTEREST RATE INTEREST RATES INTERNATIONAL FINANCIAL TRANSACTIONS INTERNATIONAL TRADE LAWS MARGINAL PRODUCT MARGINAL UTILITY MARGINAL VALUE MORAL HAZARD NASH EQUILIBRIUM PENALTIES PORTFOLIO PORTFOLIO DIVERSIFICATION PORTFOLIOS PROBABILITY OF DEFAULT PRODUCTION TECHNOLOGY PRODUCTIVITY RISK PREMIUM RISK SHARING SECURITIES SOVEREIGN RISK WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2004/06/4979487/country-portfolios http://hdl.handle.net/10986/14013

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Summary:	Capital flows to developing countries are small and take mostly the form of loans rather than direct foreign investment. We build a simple model of North-South capital flows that highlights the interplay between diminishing returns, production risk and sovereign risk. This model generates a set of country portfolios and a world distribution of capital stocks that resemble those in the data.

Country Portfolios

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