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Capital Account Openness, International Trade, and Economic Growth: A Cross-Country Empirical Investigation

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Author Info

  • James L. Butkiewicz

    ()
    (Department of Economics,University of Delaware)

  • Halit Yanikkaya

    ()
    (Department of Economics, Celal Bayar University)

Abstract

This paper investigates the relationship between capital account openness and growth. Our empirical investigation of the effects of capital restrictions on growth provides evidence supporting capital account liberalization, especially for developed countries. We also show that capital restrictions are more likely to reduce the benefits of foreign direct investment on growth in developing countries. Estimation results for long-term capital flows demonstrate that countries with higher flows tend to grow faster, and these results challenge the belief that countries must have attained a threshold level of development or human capital to benefit from capital inflows. Moreover, our results imply a substitute relationship between trade with developed countries and foreign direct investment inflows.

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File URL: http://graduate.lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2003/UDWP2003-06.pdf
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Bibliographic Info

Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 03-06.

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Length: 42 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:dlw:wpaper:03-06

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Postal: Purnell Hall, Newark, Delaware 19716
Phone: (302) 831-2565
Fax: (302) 831-6968
Web page: http://www.lerner.udel.edu/departments/economics/department-economics/
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Related research

Keywords: Financial Openness; Capital Controls; Capital Flows; Economic Growth;

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References

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Citations

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Cited by:
  1. Mazhar MUGHAL & Natalia VECHIU, 2010. "The role of Foreign Direct Investment in higher education in the developing countries (Does FDI promote education?)," Working Papers 2010-2011_10, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Nov 2010.
  2. Mare Sarr & Erwin Bulte & Chris Meissner & Tim Swanson, 2010. "On the Looting of Nations," Working Papers 183, Economic Research Southern Africa.
  3. Deepak Sethi & William Judge & Qian Sun, 2011. "FDI distribution within China: An integrative conceptual framework for analyzing intra-country FDI variations," Asia Pacific Journal of Management, Springer, vol. 28(2), pages 325-352, June.

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