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This paper aims to analyze the determinants of international capital flows in Korea during 1980-2010. In particular, we investigate the role of push (external) and pull (internal) factors in determining the magnitude and directions of overall capital flows and their components using a time-series analysis. The regression results show that external factors, in particular world interest rate, significantly affect overall capital flows in Korea. Among internal factors, current account has significant and negative effects on capital flows. The estimated coefficients vary in different sub periods. In particular, the role of internal factors decreases over time. We also find that portfolio investment is more sensitive to internal and external economic environments compared to direct investment.
