An Analysis of Reverse Capital Flow among Rich and Poor Countries (A Critical Review of R.E.Lucas's Paper)

This study is a critical review of locus's paper (1990) on international capital mobility. The key question that he addresses is: " Why does capital not flow from rich to poor countries? " The author deals with the subject by critically reviewing Lucas's work, and his choice of model and analytical objective, and tries to investigate crudely the necessary issues which were either neglected or did not receive due attention, such as: reverse human capital, inconsistent rules and regulations, and high investment risks in poor countries. Finally, in addition to the concluded remarks, primary suggestions are made with respect to reduction of political risk, development and application of proper rules to prevent money laundering and financial corruption.