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

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. Different 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.