The causes of the recent surge in private capital flows to Asia and Latin America

Abstract

The paper examines the causes of the recent surge in private capital flows to Asia and Latin America in a 'Push-Pull' framework using a panel data approach to estimation. This paper adds to the literature by distinguishing between the causes of Foreign Direct Investment and Portfolio Investment and also covers a greater time period than most other studies. The results suggest that Foreign Direct Investment is predominately caused by 'Pull' factors while 'Push' factors and exchange rate risk explain portfolio flows.