Foreign financial capital and economic growth
The article investigates the motives of allocation of capital around the world, and the effect of foreign capital inflows on economic growth in developing countries. Foreign capital might have a negative impact on the exchange rate because of the underdevelopment of their financial systems. However, a positive correlation between the current account balance and economic growth remains. This article explores the relationship between long-term current account balance and economic growth. The current account balance is an indicator of foreign investment, which can be used to make investments in the country. According to the classical theory, countries that borrow more abroad would invest more (less constrained by domestic savings) and, as a result their economic growth must be higher. Also in this article are determined internal and external factors which have influence on foreign investment into a country or group of countries. It is specified the method of calculation of investment risk. We offered an innovative mechanisms that can encourage foreign capital to be invested into Ukraine, including and based on relevant foreign experience.
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Keywords: foreign direct investment, financial market, foreign capital, current account balance, current account, growth |
MACROECONOMICS
Tymur Boiko
postgraduate SHEI «Kyiv National Economic University named after Vadym Hetman»
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