The role of population and wealth in international capital flows

Abstract

Purpose

Seeks to analyze the role of population and wealth in determining capital movements between countries.

Design/methodology/approach

By applying the Clark‐Jokung 50 percent portfolio theorem, considers the specific case of a two country world where the cumulative conditional expected outcome on the asset in one country is greater than or equal to that in the other country.

Findings

Specifically, lower population and wealth ratios (poor/rich) increase net capital flows to the poor country.

Originality/value

So far most of the literature on cross‐border capital flows has generally neglected the role of population and underestimated the role of wealth. This study addresses the gaps left by these deficiencies.

Citation

Clark, E. and Jokung, O. (2006), "The role of population and wealth in international capital flows", Studies in Economics and Finance, Vol. 23 No. 1, pp. 4-12. https://doi.org/10.1108/10867370610661918