Economics, Econometrics and Finance
3 years ago

Global barriers to investment reduce world GDP by 7%

SSRN Electronic Journal
Barriers to Global Capital Allocation
Bruno Pellegrino, Enrico Spolaore, Romain Wacziarg

Paper Summary

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The article explores how barriers to global investment impact the world economy. By analyzing different factors like distance, culture, taxes, and political risk, the researchers found that these barriers lead to a significant home bias in investing, higher returns in emerging markets, and unequal distribution of capital and output across countries. They estimate that these barriers reduce global GDP by 7% and contribute to increased inequality between nations.