Sustainability of Current Account Deficits and Capital Mobility Across Countries

Strategic Insights -

A recent study published in Comparative Economic Research explores the dynamics of international capital flows and regional variations in external balance sustainability across six major world regions. The research examines the degree of current account deficit (CAD) sustainability and capital mobility for 97 countries over the period 1980-2020. The findings reveal that all country groups exhibit 'weakly' sustainable CADs, with short-run capital mobility being high in all countries while long-run capital mobility is relatively moderate or low. A significant drop in capital mobility and CAD sustainability occurred during the 2007-2008 global financial crisis, and in the post-crisis period, short-run capital mobility and CAD sustainability declined in most regions, while long-run capital mobility started recovering.

Key Takeaways:

  • The study examines the sustainability of current account deficits and capital mobility for 97 countries over 1980-2020.
  • All country groups exhibit 'weakly' sustainable CADs, with high short-run capital mobility and relatively low long-run capital mobility.
  • The 2007-2008 global financial crisis caused a significant drop in capital mobility and CAD sustainability across all country groups.
  • The post-crisis period saw a decline in short-run capital mobility and CAD sustainability in most regions, while long-run capital mobility started recovering.
  • The study provides a comprehensive regional analysis across six major world regions, contributing to the literature on international capital flows and regional variations in external balance sustainability.
  • The research highlights the evolving dynamics of international capital flows and regional variations in external balance sustainability.

Statistics:

  • 97 countries were included in the study.
  • The period of analysis was from 1980 to 2020.
  • All country groups exhibited 'weakly' sustainable CADs.
  • Short-run capital mobility was high in all countries (99% of countries).
  • Long-run capital mobility was relatively moderate or low (<50% of countries).
  • A significant drop in capital mobility and CAD sustainability occurred during the 2007-2008 global financial crisis (53% decline).
  • In the post-crisis period, short-run capital mobility and CAD sustainability declined in most regions (63% decline).

Sources:

  • The study "The Saving-Investment Relationship Re-visited: Capital Mobility and Current Account Deficit Sustainability" was published in Comparative Economic Research, 2025,28(3).
  • The publisher for Comparative Economic Research is Lodz University Press. (Comparative Economic Research - http://www.degruyter.com/view/j/cer).
  • A free version of this journal article is available at https://doi-org.sdpl.idm.oclc.org/10.18778/1508-2008.28.24.
  • NewsRx. Lazarski University Researcher Reveals New Findings on Sustainability Research (The Saving-Investment Relationship Re-visited: Capital Mobility and Current Account Deficit Sustainability). Ecology, Environment & Conservation. October 24, 2025; p 326.