The role of population and wealth in international capital flows

Purpose – Seeks to analyze the role of population and wealth in determining capital movements between countries. Design/methodology/approach – By applying the Clark-Jokung 50 percent portfolio theorem, considers the specific case of a two country world where the cumulative conditional expected outcome on the asset in one country is greater than or equal to that in the other country. Findings – Specifically, lower population and wealth ratios (poor/rich) increase net capital flows to the poor country. Originality/value – So far most of the literature on cross-border capital flows has generally neglected the role of population and underestimated the role of wealth. This study addresses the gaps left by these deficiencies.