TY - JOUR
T1 - Financial Flows and Economic Growth
T2 - A Comparative Analysis Between South Asia and Developing Countries
AU - Abbas, Syed Ali
AU - Selvanathan, Eliyathamby A.
AU - Selvanathan, Saroja
N1 - Publisher Copyright:
© The Author(s) 2025. This article is distributed under the terms of the Creative Commons Attribution 4.0 License (https://creativecommons.org/licenses/by/4.0/) which permits any use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access page (https://us.sagepub.com/en-us/nam/open-access-at-sage).
PY - 2025/5/3
Y1 - 2025/5/3
N2 - This study undertakes a comparative analysis of the impact of international financial flows—specifically foreign aid, foreign direct investment (FDI) and remittances—on economic growth in South Asia (SA) and 45 other developing countries, using panel data for the period 1980–2016. The study also analyses the indirect influences of financial flows on growth mediated through key transmission channels, including political stability, trade openness and human capital (HC) for both groups. On controlling endogeneity, the results indicate that foreign aid discourages growth both in developing countries and SA. However, FDI and remittances promote growth in the two groups of countries, while their impact is higher in SA. Investigation of transmission channels reveals multiple significant roles of financial flows in impacting economic growth. Exploring the dynamic roles of international financial flows, the findings of the study offer a deeper understanding and insights to policymakers in the developing world.
AB - This study undertakes a comparative analysis of the impact of international financial flows—specifically foreign aid, foreign direct investment (FDI) and remittances—on economic growth in South Asia (SA) and 45 other developing countries, using panel data for the period 1980–2016. The study also analyses the indirect influences of financial flows on growth mediated through key transmission channels, including political stability, trade openness and human capital (HC) for both groups. On controlling endogeneity, the results indicate that foreign aid discourages growth both in developing countries and SA. However, FDI and remittances promote growth in the two groups of countries, while their impact is higher in SA. Investigation of transmission channels reveals multiple significant roles of financial flows in impacting economic growth. Exploring the dynamic roles of international financial flows, the findings of the study offer a deeper understanding and insights to policymakers in the developing world.
KW - Economic growth
KW - foreign aid
KW - foreign direct investment
KW - remittances
UR - https://www.scopus.com/pages/publications/105004186921
U2 - 10.1177/13915614251337553
DO - 10.1177/13915614251337553
M3 - Article
AN - SCOPUS:105004186921
SN - 1391-5614
VL - 26
SP - 7
EP - 31
JO - South Asia Economic Journal
JF - South Asia Economic Journal
IS - 1
ER -
