Short- and Long-Term Effects of Financial Flows on Economic Growth

Globalization represents a central research activity and remains an increasingly controversial phenomenon in economics. It corresponds to a subject that can be criticized through its impact on national economies. In contrast, the world economy is evolving in a liberalized environment wherein Foreign Direct Investment plays a fundamental role in the economic development of each country. The advent of financial flows -Foreign Direct Investment, remittances, and official development assistance- can be key factors in economic development. This article analyzes the effect of financial flows on economic growth in developing countries. Empirically, different approaches have been employed. As part of this work, an attempt was made to use a combined autoregressive distributed lag panel approach to study the short- and long-term effects of financial flows on economic growth. The results indicate ambiguous effects.