Does Financial Openness Promote Economic Integration?
AbstractThe effect of financial openness on economic integration for two clusters of countries is estimated: the formerly planned economies of Eastern Europe and central Asia (emerging market economies) and some western advanced economies. We focus on two dimensions of economic integration: convergence of per-capita incomes across countries and trade integration. We employ both single equation estimation and system estimation to account for endogenous links between trade integration and income convergence. Results show that in the cluster of emerging market economies, financial openness is a powerful instrument of economic integration. In the group of advanced economies, financial openness effectively facilitates income convergence, but its impact on trade integration is ambiguous.
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Bibliographic InfoPaper provided by UNECE in its series ECE Discussion Papers Series with number 2007_4.
Length: 18 pages
Date of creation: Jun 2007
Date of revision:
Publication status: Published in UNECE Discussion Paper Series, No. 2007_4
financial openness; economic integration; transition economies; east Europe;
Find related papers by JEL classification:
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-11-10 (All new papers)
- NEP-INT-2007-11-10 (International Trade)
- NEP-SEA-2007-11-10 (South East Asia)
- NEP-TRA-2007-11-10 (Transition Economics)
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