Paper #1760

Title:

Bilateral international investments: The big sur?

Authors:

Fernando Broner, Tatiana Didier, Sergio L. Schmukler and Goetz von Peter

Date:

December 2020 (Revised: June 2023)

Abstract:

This paper presents novel stylized facts about the rise of the South in global finance using country-to- country data. To do so, the paper assembles comprehensive bilateral data on cross-border bank loans and deposits, portfolio investment, foreign direct investment, and international reserves from 2001 to 2018. The main findings are that investments involving the South, and especially within the South, have grown faster than those within the North. By 2018, South-to-South investments accounted for 8% of total international investments, while investments between the South and the North accounted for an additional 26%. The fastest growth occurred in portfolio investment and international reserves, whereas the slowest growth was in banking. These trends are not driven by China, any particular South region, or offshore financial centers. South-to-South investments grew the fastest even after controlling for regional GDP growth. The extensive margin played a significant role in the growth of investments within the South.

Keywords:

international capital flows; emerging economies; international financial integration; foreign direct investment; portfolio investment

JEL codes:

F21, F36, G15

Area of Research:

Macroeconomics and International Economics

Published in:

Journal of International Economics, 145, article 103795, 2023.

Comment:

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