Abstract
We characterize the marginal product of capital on a cross-section data of 88 economies over 1980–2013. The marginal product of capital is increasing on savings misallocation rate, measuring the fraction of savings unconverted into investment, on productivity growth and on financial openness. One country with a higher marginal product of capital makes more domestic investment, receives more foreign direct investment (FDI) and equities inflows, but accumulates more foreign debts and reserves. Moreover, it also has a higher financial development level.
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