Are All Foreign Capitals Created Equal? Evidence from Asia and Latin America

Foreign Direct Investment (FDI) and foreign remittances have been the main sources of foreign capital inflows for many developing countries. FDI has been the main driver of growth for South-East Asian countries including China. Conversely, it has been difficult to determine firmly the positive effects of FDI on long run economic growth for Latin American countries. Furthermore, the increasing of foreign remittances in the last two decades put into question if FDI along with remittances have had the expected positive results on economic growth. We attempt to quantify the impacts of FDI and foreign remittances as a source of foreign capital for both regions using a GMM dynamic panel model.