What drives non-financial private capital outflows in Latin America?

PÉREZ ARTICA, RODRIGO; RABINOVICH, JOEL

Congreso; LV Reunión Anual de la Asociación Argentina de Economía Política; 2020

Asociación Argentina de Economía Política

We provide an empirical assessment of capital outflows made over the last three decadesby the non-financial private sector in six large Latin American economies: Argentina, Brazil,Chile, Colombia, Mexico and Peru. Whereas considerable attention has been recently devotedto corporate capital inflows to emerging market countries, the accumulation of foreign assetsmade by the non-financial private sector in these countries has gone mostly overlooked. We showthat these outflows are quantitatively relevant, outweighing those made by banks. Moreover,although there are noticeable differences across countries, we find that in general these outflowsare: (i) highly correlated with the global financial cycle; (ii) positively related to capital inflowsand the balance of payments? current account balance, implying that they grow with higherforeign exchange availability; (iii) seemingly not affected by changes in domestic assets? riskand capital controls.