BIS central bankers’ speeches  1  economies, such as Australia, Canada, and New Zealand, points to a notable role for foreign capital, especially from the United Kingdom and the United States.2 And the United States was itself aided by foreign capital at an early stage of its development.3 That the advanced economies have achieved high standards of living, while at the same time embracing financial openness, suggests that such openness is likely to bring long-term benefits for other countries as well.
Free capital markets support economic growth by allowing resources to move across borders to their most productive uses. These flows should expand the opportunities for savers and, in the savings-rich countries, likely raise the return on domestic savings. Capital inflows can lower the cost of capital to firms in capital-scarce countries, raising investment.