Global governance and gross capital flows dynamics

One of the famous puzzles in macroeconomics, Lucas (Am Econ Rev 80:92–96, 1990) paradox on “why doesn’t capital flow from rich to poor countries”, continues exist and shapes flows modern world. This paper provides cross-country evidence role politico-institutional financial determinants gross dynamics over period 2000–2016. Using panel regressions incorporating country fixed effects, study argues that institutional quality rather than effect diminishing returns is a key explanation for “Lucas Paradox”. It corroborates previous empirical government effectiveness, regulatory quality, rule law, political stability remain most important indicators determining dynamics, highlighting symmetric effect. In contrast, voice accountability, corruption are not significant outflows dynamics. The main contribution comes identifying link between multidimensional nature development flows. results highlight significance differences inflows/outflows depending country’s level development. shows predominance institutions versus markets dissemination