An Analysis of Robert E. Lucas Jr.'s Why Doesn't Capital Flow from Rich to Poor Countries? - Why Doesn't Capital Flow from Rich to Poor Countries?

Because the potential returns appear to be greater in poorer countries than in the developed world, modern economic theory implies that rich countries should continually invest in poor countries until returns balance out. But this doesn’t happen – and economist Robert E. Lucas Jr. asked why in his ground-breaking 1990 article on what has become known as the Lucas paradox.