Transitory Impacts of Foreign Capital Flows
Kanfitine Lare-Lantone, Madow Nagou, Emmanuel Anoruo

Abstract
We estimated the transitory multipliers associated with remittances, FDI, and ODA to assess the influence the economic environment exerts on their indirect impact on growth in 37 countries over the period 1970-2021. While that influence is significant, income is the most significant of the transitory variables. The values of their associated transitory multipliers indicate that remittances and FDI are substitutes in 24 countries but complementary in 14, remittances and ODA are substitutes in 22 countries but complementary in 10 while FDI and ODA are substitutes in 22 countries but complementary in 10. Though FDI and ODA have equal stabilizing influences, ODA has a more destabilizing influence. Besides, FDI is the optimal foreign capital for the whole sample and 6 individual countries, remittances for 7, ODA for 4, remittances-FDI flows for 6, remittances-ODA flows for 4, and FDI-ODA flows for 7. The main conclusion is that a country can maximize the related gains if it only receives the optimal foreign capital(s) to induce the highest growth. Besides, the need for accommodative government policies, the choice of foreign capital(s) should account for the structure of its economy including the market size, labor productivity, production cycle, and potential growth.

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