Capital Account Flows, Consumption Ratios and the Middle‐Income Trap

Daping Zhao; Sajid Anwar; William R J Alexander

doi:10.1111/rode.12597

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Capital Account Flows, Consumption Ratios and the Middle‐Income Trap

Journal article

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Capital Account Flows, Consumption Ratios and the Middle‐Income Trap

Daping Zhao, Sajid Anwar and William R J Alexander

Review of Development Economics, Vol.23(3), pp.1459-1476

2019

DOI: https://doi.org/10.1111/rode.12597

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Abstract

capital account flows

consumption ratio

growth slow-down

middle-income trap

The existing literature suggests that it is important to understand the factors that may slow the transition of an economy from middle to high income. Many factors have been suggested as promoting or retarding economic growth, but little attention has been paid to the roles of the capital account and consumption ratio. Using panel regressions involving 48 countries over the 1950-2013 period as well as employing extreme bounds analysis, we find that foreign investment outflows are associated with a mature economy and that there is an optimal consumption ratio that must be surpassed to break out of middle-income status. These findings are robust to an extreme bounds analysis incorporating a wide range of variables potentially related to growth performance.

Details

Title: Capital Account Flows, Consumption Ratios and the Middle‐Income Trap
Authors: Daping Zhao (Author) - Shanghai Lixin University of Accounting and Finance, China
Sajid Anwar (Corresponding Author) - University of the Sunshine Coast - School of Business
William R J Alexander (Author) - University of the Sunshine Coast - School of Business
Publication details: Review of Development Economics, Vol.23(3), pp.1459-1476
Publisher: Wiley-Blackwell Publishing Ltd.
Date published: 2019
DOI: 10.1111/rode.12597
ISSN: 1363-6669; 1467-9361
Organisation Unit: School of Business and Creative Industries; Indigenous and Transcultural Research Centre; University of the Sunshine Coast, Queensland; USC Business School - Legacy
Language: English
Record Identifier: 99450641602621
Output Type: Journal article

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Web Of Science research areas: Development Studies; Economics

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