Decomposition of External Capital Inflows and Outflows in the Small Open Transition Economy (The Case Analysis of the Slovak Republic)

Abstract

The main objective of the proceeding is to perform a logical decomposition of the structure of external capital inflows and outflows in the Slovak republic in order to analyze the main trends in the external financial integration and its development through the period of 1994-2006. In order to fulfill our objective we observe the changes in the structure of external financial assets and liabilities in order to provide the explanation of main trends in the external capital portfolio of the Slovak republic. Finally, we explore the implications of the accumulated stock of external capital for future trade and current account balances.

Key words: Financial integration, External capital structure, Foreign financial assets, Foreign financial liabilities, Transition economies.
JEL: F15, F36, F41.