TY  - JOUR
AB  - Purpose In the past few decades, there have been phenomenal increases in capital flows to developing and emerging markets. However, a key question that has largely remained unanswered is whether the expected economic benefits have materialized. Existing studies have concentrated on the impact of capital flows on domestic investment in developing countries, emerging markets, transition economies, ECOWAS and sub-Saharan Africa, leaving an important economic bloc, OPEC. This paper aims to assess the impact of capital flows on domestic investment in OPEC countries – with a view to determining whether capital flows crowd in or crowd out domestic investment.Design/methodology/approach For the empirical analysis, the authors used the autoregressive distributed lag (ARDL) technique.Findings The empirical results provide evidence that capital flows crowd out domestic investment in all the OPEC countries considered, except for Angola and Kuwait. The authors further extended the analysis to disaggregated capital flows (FDI, portfolio investment). Evidence from the different capital flows components revealed that, for most countries, the different capital flows components also crowd out domestic investment.Originality/value To the best of the author’s knowledge, no study has empirically addressed the effect of capital flows on domestic investment in OPEC countries. This study, therefore, constitutes an interesting empirical contribution and a novel idea in the literature.
VL  - 11
IS  - 4
SN  - 1757-6385
DO  - 10.1108/JFEP-06-2018-0090
UR  - https://doi.org/10.1108/JFEP-06-2018-0090
AU  - Ibhagui Oyakhilome
AU  - Olawole Kolawole
PY  - 2019
Y1  - 2019/01/01
TI  - Capital flows and domestic investment: new evidence from OPEC countries
T2  - Journal of Financial Economic Policy
PB  - Emerald Publishing Limited
SP  - 505
EP  - 532
Y2  - 2024/04/20
ER  -