| Summary: | 碩士 === 長榮大學 === 經營管理研究所 === 100 === This study aims to analyze the short-run and long-run effect of international capital flow on economic growth respectively and categorizes international capital flows into the foreign direct investment and foreign portfolio investment by its nature. This paper also exploits Pooled Mean Group (PMG), presented by Pesaran, Shin and Smith (1999), to estimate the unbalanced quarterly panel data of 76 countries from the year 1991 to the year 2010. The finding shows that, of all the 76 subjects, foreign direct investment tends to have positive long-run effects on most countries’ economic growth, while foreign portfolio investment tends to have negative long-run effects on them. The same results occurs even though the subjects are categorized into the developed countries and the developing ones. Another interesting finding is that: foreign portfolio investment has negative effect on stock index in the long-run but positive effect in the short-run for the developed countries.
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