Barro, Mankiw and Sala-i-Martin (1995) present an open-economy version of a
simple neoclassical growth model. In this model domestic residents own the
physical capital stock but may obtain part or all of the financing for this stock by
issuing bonds to foreigners. By relaxing the constraint that domestic savings
finance domestic investment, the availability of foreign savings increases the rate
of physical capital accumulation. This in turn increases the country’s speed of
convergence to its steady state level of output