arbiter
JournalsPricingAccount

The International Capital Flows and Domestic Savings–domestic Investment Nexus: A Comparative Evidence Between Heterogeneous Developing Regions

Shreya Pal

South Asian Journal of Macroeconomics and Public Finance2024https://doi.org/10.1177/22779787241245779article
AJG 1ABDC C
Weight
0.48

What the paper says

Drawing inspiration from Feldstein and Horioka’s (1980) (FH) puzzle, our study elucidates the impact of remittances and Foreign Direct Investment (FDI) on domestic savings and investment in two disparate yet globalized developing regions: Latin America and the Caribbean and South Asia. Utilizing an extensive dataset spanning from 1984 to 2021 and employing diverse methodologies, including Dynamic System generalized method of moment, Driscoll–Kraay standard error, fully modified ordinary least squares, and dynamic ordinary least squares, our findings reveal that remittances exert a positive influence on both domestic investment and savings across both regions. However, South Asia predominantly directs remittance inflows towards investment, while Latin America and the Caribbean exhibit a propensity towards saving these funds. As for FDI, the primary developing region predominantly channels these funds into investment, whereas the lower region prioritizes savings. The impact of control variables manifests varied effects across both regions. Ultimately, our study underscores the pivotal role of foreign remittances in supporting investment and savings, underscoring the profound influence of economic growth on these dynamics. This accentuates the imperative for governments to proactively allocate financial resources to optimize economic growth and fortify financial frameworks. Moreover, focused strategies are indispensable for adeptly managing foreign inflows while navigating external shocks such as international repayments, external debt, and aid. Additionally, enhancements in monetary and fiscal policies are imperative to sustain competitive interest rates and foster stable macroeconomic conditions, thereby fostering conducive environments for both public and private domestic savings. JEL Classification: F24; F3; P33; C23; O18

3 citations

Open paper page →

Cite this paper

https://doi.org/https://doi.org/10.1177/22779787241245779

Or copy a formatted citation

@article{shreya2024,
  title        = {{The International Capital Flows and Domestic Savings–domestic Investment Nexus: A Comparative Evidence Between Heterogeneous Developing Regions}},
  author       = {Shreya Pal},
  journal      = {South Asian Journal of Macroeconomics and Public Finance},
  year         = {2024},
  doi          = {https://doi.org/https://doi.org/10.1177/22779787241245779},
}

Paste directly into BibTeX, Zotero, or your reference manager.

Flag this paper

The International Capital Flows and Domestic Savings–domestic Investment Nexus: A Comparative Evidence Between Heterogeneous Developing Regions

Flags are reviewed by the Arbiter methodology team within 5 business days.

Evidence weight

0.48

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.41 × 0.4 = 0.16
M · momentum0.57 × 0.15 = 0.09
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.