Capital Flows from the 1990s to the Current Day
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Global capital flows have gone from Lucas in the early 1990s when he posed the question: ‘Why doesn’t capital flow from rich to poor countries?’1 to the current global paradox of capital that flows ‘upstream’ from emerging market economies to the developed world. Obviously, two countries come to mind almost instantly and that’s China’s capital flows into the United States and China. With that said, the lion’s share of these funds is earmarked for the purchase of US treasury securities. There are additional capital flows which are for portfolio investment other than US treasuries and there are Chinese capital flows earmarked for foreign direct investment. The specifics of each breakdown will be covered later in the book.
KeywordsForeign Direct Investment Monetary Policy Share Variation Capital Flow Capital Inflow
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