July 20, 2011
Should Capital Flow From Rich to Poor Countries?
Carnegie Endowment, Carnegie Endowment for International Peace
Economists tend to assume that capital should move from advanced economies—those with abundant capital—to developing ones—those with little capital and abundant labor. However, this line of thinking is not only simplistic and empirically unverified, but it is also dangerous. It can, for instance, encourage developing countries to attract capital they cannot absorb and is ultimately destabilizing.
TAGGED: Foreign Aid, Capitalism