If capital flows are well absorbed by the real economy and do not generate macro-economic or financial instabilities, they stay. Such capital flows augment growth over the long-run and may help income levels in developing economies converge towards the income levels in advanced economies. Second, capital is likely to be attracted towards countries with high productivity growth and higher marginal productivity of capital.
However, in practice this is found to be not necessarily true. Third, what is generally missed is the fact that it is not just the net capital flows that drive growth, but also the gross capital flows contribute to growth. Gross capital flows contribute immensely to diffusion of technology and international knowledge flows.