engleski

International Equity Capital Flows and Growth in European Transition Economies

International equity capital inflows have positively influenced growth in transition economies during the past decade both in Central and Eastern Europe and in Asia. This paper argues that foreign direct investment in the form of equity capital helped by complementing scarce domestic savings in financing gross fixed capital formation. The paper also hypothesizes that, at the stage of technological development, which places transition economies at some distance from the world technological frontier, additions to the physical stock of capital, contributed to growth more than technological progress through increasing total factor productivity.

international private capital flows; transition economies; financial sector; banking

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