BORA CMI: Some reasons why capital does not flow from rich to poor countries

Please use this identifier to cite or link to this item: http://hdl.handle.net/10202/306

Title:	Some reasons why capital does not flow from rich to poor countries
Authors:	Nordås, Hildegunn Kyvik
Keywords:	International capital flows Economic growth Industrial structure
Issue Date:	1997
Publisher:	Chr. Michelsen Institute
Series/Report no.:	CMI Working paper WP 1997: 18
Abstract:	This paper introduces endogenous adoption costs for productive assets in a Ramsey type growth model with international capital flows. There are two c1asses of productive assets: owner-specific and location-specific. Adoption costs are an increasing function of the level of technology embodied in the investor's owner-specific assets and a dec1ining function of the host country's location-specific assets. In this setting the return to capital is low in capital-poor countries. Consequently, they receive small amounts of foreign investments. Further, even though capital flows from North are spread evenly across industries in the South, the relative importance of high-technology industries is small in terms of output.
URI:	http://hdl.handle.net/10202/306
ISSN:	0804-3639
Appears in Collections:	CMI Collection (Reports, Working Papers, Articles etc.)

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