How do Carmen Reinhart and Kenneth Rogoff account for the paradox of capital flowing from poorer to wealthier nations?

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The migration of skilled individuals from less developed to developed countriesThe influence of political instability and credit risk pricing in many less developed countriesThe principle of increasing returns suggesting higher capital productivity in poorer countriesThe assumption that capital markets in developed countries operate under perfect competitionThe superior technological advancements in developed countries attracting capital

Explanation

Reinhart and Rogoff attribute the paradox of capital moving from poor to rich countries primarily to the pricing of political and credit risks in many less developed countries, which discourages investment despite potentially higher returns.