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Liberalization of capital flows can benefit both source and recipient countries by improving resource allocation, reducing financing costs, increasing competition and accelerating the development of domestic financial systems. The empirical evidence, however, is mixed on the benefits, and it suggests that countries benefit most when they meet certain thresholds related to institutional and financial development. The principal cost of capital flow liberalization stems from the economic instability brought on by volatile capital flows. In extreme cases, sudden stops or reversals in capital inflows can trigger financial crises followed by prolonged periods of weak growth.

Foreign exchange rates. --- Capital flows.

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This paper analyzes the joint behavior of international capital flows by foreign and domestic agents-gross capital flows-over the business cycle and during financial crises. The authors show that gross capital flows are very large and volatile, especially relative to net capital flows. When foreigners invest in a country, domestic agents tend to invest abroad, and vice versa. Gross capital flows are also pro-cyclical, with foreigners investing more in the country and domestic agents investing more abroad during expansions. During crises, especially during severe ones, there is retrenchment, that is, a reduction in both capital inflows by foreigners and capital outflows by domestic agents. This evidence sheds light on the nature of shocks driving capital flows and helps discriminate among existing theories. The findings seem consistent with shocks that affect foreign and domestic agents asymmetrically, such as sovereign risk and asymmetric information.

Capital Flows --- Crises --- Debt Markets --- Domestic investors --- Economic Theory & Research --- Emerging Markets --- Foreign investors --- Gross capital flows --- Macroeconomic Management --- Macroeconomics and Economic Growth --- Net capital flows

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This paper analyzes the joint behavior of international capital flows by foreign and domestic agents-gross capital flows-over the business cycle and during financial crises. The authors show that gross capital flows are very large and volatile, especially relative to net capital flows. When foreigners invest in a country, domestic agents tend to invest abroad, and vice versa. Gross capital flows are also pro-cyclical, with foreigners investing more in the country and domestic agents investing more abroad during expansions. During crises, especially during severe ones, there is retrenchment, that is, a reduction in both capital inflows by foreigners and capital outflows by domestic agents. This evidence sheds light on the nature of shocks driving capital flows and helps discriminate among existing theories. The findings seem consistent with shocks that affect foreign and domestic agents asymmetrically, such as sovereign risk and asymmetric information.

Capital Flows --- Crises --- Debt Markets --- Domestic investors --- Economic Theory & Research --- Emerging Markets --- Foreign investors --- Gross capital flows --- Macroeconomic Management --- Macroeconomics and Economic Growth --- Net capital flows

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El presente informe versa sobre este tipo de crecimiento elevado y sostenido: sus causas, consecuencias y su dinamica interna. En el informe se senalan algunas de las caracteristicas distintivas de las economias de crecimiento elevado y se procura establecer que deben hacer otros paises en desarrollo para emularlas. El estudio revisa las 13 economias que han tenido un alto crecimiento sostenido en el periodo de posguerra y presenta los ingredientes que podria incluir una estrategia de crecimiento. Estos van desde las politicas de inversion publica y tipos de cambio, hasta las ventas de terrenos y redistribucion de la tierra. Tambien analiza desafios al crecimiento en contextos especificos de cada pais, y dedica un apartado a estudiar los desequilibrios y las nuevas tendencias globales.

Capital --- Capital Flows --- Income Level --- Poverty --- Spanish Translation

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Using country-to-country data, this paper documents a set of novel stylized facts about the rise of the South in global finance. The paper assembles comprehensive bilateral data on cross-border bank loans and deposits, portfolio investment in debt and equity, foreign direct investment, and international reserves. The main finding is that global financial integration with and especially within the South (countries outside the G7 and Western Europe) has grown faster than within the North. By 2018, the South accounted for 24 to 40 percent of international loans and deposits, portfolio investment, and foreign direct investment, an increase of roughly 10 percentage points since 2001. The growing importance of the South is reflected in the intensive and extensive margins, with fast growth in the number of bilateral links. Although China weighs heavily in these trends, international investment in the rest of the South has increased to a similar extent.

Capital Flows --- Capital Markets and Capital Flows --- Emerging Market Economies --- Finance and Financial Sector Development --- Foreign Direct Investment --- International Capital Flows --- International Economics and Trade --- International Financial Integration --- Investment and Investment Climate --- Investment Climate --- Macroeconomics and Economic Growth --- Portfolio Investments