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Unlocking growth: How capital liberalization and technology finance drive high-quality economic development

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  • Zheng, Zhiyong
  • Yang, Xiaodong
  • Ali, Shoaib

Abstract

Capital account liberalization and technology finance development are pivotal drivers of high-quality economic development (HQED). This study explores their interrelationship and the time-varying impacts on economic quality. The results indicate that capital account liberalization may have a positive impact on short-term technology finance development, and its long-term effects remain unclear and warrant further observation. The current influence of technology finance development on driving capital account liberalization is unstable due to the influence of factors such as policy environments and industrial development, and this instability is particularly pronounced during economic crises. Observations across specific time points reveal a weakening trend in the positive impact of deepening capital account liberalization reforms on technology finance. In contrast, technology financial industry clustering can promote capital account liberalization. Although capital liberalization and technology finance advancement contribute to HQED, the mechanisms through which they operate and their magnitudes differ in economically meaningful ways. Therefore, China must accelerate capital account channel-type reform and foster technology finance clustering to promote HQED.

Suggested Citation

  • Zheng, Zhiyong & Yang, Xiaodong & Ali, Shoaib, 2026. "Unlocking growth: How capital liberalization and technology finance drive high-quality economic development," Economic Modelling, Elsevier, vol. 162(C).
    • Handle: RePEc:eee:ecmode:v:162:y:2026:i:c:s0264999326002051
    DOI: 10.1016/j.econmod.2026.107676
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