On the impact of private capital flows on economic growth and development

This paper raises two different, but related, questions: On the one hand, is there a link between international capital flows and economic growth? On the other hand, is there a link between international capital flows and development? We address the first question using a structural econometric model and we find a significantly positive relationship between capital flows and growth. This relationship is robust to various measures of capital flows. As to the second question, we perform a simple correlation analysis. We do not find any significant correlation between capital flows and development.