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The Liberalization of Capital Outflows in CIBS: What Opportunities for Other Developing Countries?

This paper examines the implications of the liberalization of capital outflows in China, India, Brazil, and South Africa (CIBS) for other developing countries. It focuses on their prospects of attracting not only foreign direct investment (FDI), but also portfolio capital flows from CIBS. To inform the discussion, two steps are taken: first, in order to identify the type of capital flows that might come from CIBS, the paper briefly describes capital account liberalization measures undertaken by CIBS to date and future intended liberalization. Second, it maps geographic distribution of outward FDI and foreign portfolio investment in the recent past, which are taken as possible predictors of future flows. The paper shows that portfolio investment goes mainly to OECD countries and offshore financial centres, and only a small share to developing countries. But, within developing countries, CIBS’ neighbouring countries have shown a greater ability to attract this type of investment, compared with other developing countries.
Publisher:
UNU-WIDER
Series:
WIDER Research Paper
Volume:
2008/68
Title:
The Liberalization of Capital Outflows in CIBS: What Opportunities for Other Developing Countries?
Authors:
Ricardo Gottschalk and Cecilia Azevedo Sodre
Publication date:
August 2008
ISSN Web:
1810-2611
ISBN 13 Web:
9789292301224
Copyright holder:
© UNU-WIDER
Copyright year:
2008
Keywords:
capital account liberalization, FDI, portfolio capital flows, south–south capital flows, developing countries
JEL:
F21, F32, F37, G18
Project:
Southern Engines of Global Growth
Sponsor:
The governments of Denmark (Royal Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Norway (Royal Ministry of Foreign Affairs), Sweden (Swedish International Development Cooperation Agency — Sida) and the United Kingdom (Department for International Development).
Format:
online
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