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There is a debate on whether some forms of financial flows offer better crisis protection than others. Using a large panel of advanced, emerging, and developing countries during 1970-2003, this paper analyzes the behavior of various types of flows: foreign direct investment (FDI), portfolio equity investment, portfolio debt investment, other flows to the official sector, other flows to banks, and other flows to the non-bank private sector. Differences across types of flows are limited with respect to volatility, persistence, cross-country comovement, and correlation with growth at home or in the world economy. However, consistent with conventional wisdom, FDI is found to be the least volatile form of financial flows when taking into account the average size of net or gross flows. The differences are striking during "sudden stops" in financial flows (defined as drops in total net financial inflows by more than 5 percentage points of GDP compared with the previous year): in such episodes, FDI is remarkably stable; portfolio equity also seems to play a limited role; portfolio debt experiences a reversal, though it recovers relatively quickly; and other flows (including bank loans and trade credit) experience severe drops and remain depressed for a few years.

Capital movements. --- Electronic books. -- local. --- Investments, Foreign. --- Capital exports --- Capital imports --- FDI (Foreign direct investment) --- Foreign direct investment --- Foreign investment --- Foreign investments --- International investment --- Offshore investments --- Outward investments --- Capital flight --- Capital flows --- Capital inflow --- Capital outflow --- Flight of capital --- Flow of capital --- Movements of capital --- Capital movements --- Investments --- Balance of payments --- Foreign exchange --- International finance --- Exports and Imports --- Finance: General --- Statistics --- International Investment --- Long-term Capital Movements --- International Monetary Arrangements and Institutions --- Financial Aspects of Economic Integration --- Current Account Adjustment --- Short-term Capital Movements --- General Financial Markets: General (includes Measurement and Data) --- International economics --- Finance --- Econometrics & economic statistics --- Sudden stops --- Financial account --- Emerging and frontier financial markets --- Balance of payments statistics --- Financial markets --- Economic and financial statistics --- Investments, Foreign --- Financial services industry --- United States

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This paper analyzes the impact of international trade on the quality of institutions, such as contract enforcement, property rights, or investor protection. It presents a model in which imperfect institutions create rents for some parties within the economy, and are a source of comparative advantage in trade. Institutional quality is determined as an equilibrium of a political economy game. When countries share the same technology, there is a "race to the top'' in institutional quality: irrespective of country characteristics, both trade partners are forced to improve institutions after opening. On the other hand, domestic institutions will not improve in either country when one of the countries has a strong enough technological comparative advantage in the institutionally intensive good. We provide empirical evidence for a related cross-sectional prediction of the model. Countries whose exogenous geographical characteristics predispose them to exporting in institutionally intensive sectors exhibit significantly higher institutional quality.

Zonder onderwerpscode: economie

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We analyze the relationship between international trade and the quality of economic institutions, such as contract enforcement, rule of law, and property rights. In our model, firms differ in their preferences for institutional quality, which is determined endogenously in a political economy framework. We show that trade opening can worsen institutions when it increases the political power of a small elite of large exporters who prefer to maintain bad institutions. The detrimental effect of trade on institutions is most likely to occur when a small country captures a sufficiently large share of world exports in sectors characterized by economic profits.

Electronic books. -- local. --- Equality. --- Income distribution. --- International trade. --- Egalitarianism --- Inequality --- Social equality --- Social inequality --- Distribution of income --- Income inequality --- Inequality of income --- External trade --- Foreign commerce --- Foreign trade --- Global commerce --- Global trade --- Trade, International --- World trade --- Political science --- Sociology --- Democracy --- Liberty --- Distribution (Economic theory) --- Disposable income --- Commerce --- International economic relations --- Non-traded goods --- Investments: Commodities --- Exports and Imports --- Finance: General --- Macroeconomics --- Political Economy --- Agriculture: General --- Trade: General --- General Financial Markets: General (includes Measurement and Data) --- Labor Economics: General --- Investment & securities --- International economics --- Finance --- Political economy --- Labour --- income economics --- Agricultural commodities --- Exports --- Competition --- Labor --- Farm produce --- Economics --- Labor economics --- United States --- Income economics