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The Composition of Capital Flows: Is South Africa Different?

Author/Editor: Arezki, Rabah | Ahmed, Faisal | Funke, Norbert
Authorized for Distribution: March 1, 2005
Electronic Access: Free Full Text (PDF file size is 493KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: Over the past decade, South Africa has attracted relatively little foreign direct investment (FDI), but considerable amounts of portfolio inflows. In this context, the objective of the paper is twofold: to identify the determinants of the level and composition of capital flows to emerging markets and to draw policy conclusions for South Africa. We estimate a dynamic panel for up to 81 emerging markets using GMM (Generalized Method of Moments) techniques. The results suggest that further trade and capital control liberalization would increase the share of FDI. Additionally, a reduction in exchange rate volatility would affect the composition of capital flows in favor of FDI.
 
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Series: Working Paper No. 05/40
Subject(s): Capital flows | South Africa | Exchange rates | Foreign investment
Author's keyword(s): Composition of capital flows | exchange rate volatility | financial development
 
English  
    Published:   March 1, 2005        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2005040   Pages:   28
    Price:   US$15.00 (Academic Rate: US$15.00 )
       
     
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