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Growth and structural reforms: A new assessment

  • Christiansen, Lone
  • Schindler, Martin
  • Tressel, Thierry

This paper presents a simultaneous assessment of the relationship between economic performance and three groups of economic reforms: domestic finance, trade, and the capital account. Domestic financial reforms and trade reforms are robustly associated with economic growth, but only in middle-income countries. In contrast, there is no evidence of a systematic positive relationship between capital account liberalization and economic growth. Moreover, the effect of domestic financial reforms on economic growth in middle-income countries is accounted for by improvements in measured aggregate TFP growth, not by higher aggregate investment. Additional analysis suggests that sufficiently developed property rights are a precondition for reaping the benefits of financial and trade reforms. Our results are robust to endogeneity bias and a number of alternative specifications.

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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 89 (2013)
Issue (Month): 2 ()
Pages: 347-356

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Handle: RePEc:eee:inecon:v:89:y:2013:i:2:p:347-356
DOI: 10.1016/j.jinteco.2012.07.008
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505552

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