Cross-Country Evidence on the Link between the Level of Infrastructure and Capital Inflows

provided by Research Papers in Economics

Cross-Country Evidence on the Link between the Level of

Infrastructure and Capital Inflows*

Mathias Hoffmann

Department of Economics, Trinity College Dublin^

14th June 2002

Abstract

This paper empirically investigates the relationship between public infrastructure and
international capital flows. Out of a sample of thirty countries a cross-sectional econometric
model is constructed to estimate the effects. Various components of infrastructure variables
are tested in relation to their impact on different kinds of external capital liabilities. The
results suggest a positive relationship between the level of infrastructure and capital inflows.
However, statistical significance cannot be established for all variables in question.

JEL Classification: C21, F21, F30, F41.

Keywords: Long-Term Capital Movements, International Finance and Open Economy
Macroeconomics.

* A version of this paper is forthcoming in the Journal ’Applied Economics’. I am grateful to Philip Lane and
thank participants at the Trinity International Group Seminar for helpful comments and suggestions. This work
is part of a research network on ’The Analysis of International Capital Markets: Understanding Europe’s Role
in the Global Economy’, funded by the European Commission under the Research Training Network Programme
(Contract No. HPRN-CT-1999-00067).

tAddress of Correspondence: Mathias Hoffmann, Department of Economics, Trinity College, Dublin 2, Ireland.
email: [email protected]

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