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International financial liberalization and industry growth

Author

Listed:
  • Jonas Vlachos

    (The Research Institute of Industrial Economics and CEPR, Sweden)

  • Daniel Waldenström

    (Stockholm School of Economics, Sweden)

Abstract

The growth effects of international financial liberalization and integration are investigated using the methodology and data developed by Rajan and Zingales (1998). The main result is that industries highly dependent on external financing do not experience higher growth in value added in countries with liberalized financial markets. Liberalization does, however, increase the growth rates of both output and firm creation among externally dependent industries-given that the countries have reached a relatively high level of financial development. These results are consistent both with increased competition and increased outsourcing. Some tentative evidence points towards the latter explanation. Copyright © 2005 John Wiley & Sons, Ltd.

Suggested Citation

  • Jonas Vlachos & Daniel Waldenström, 2005. "International financial liberalization and industry growth," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 10(3), pages 263-284.
  • Handle: RePEc:ijf:ijfiec:v:10:y:2005:i:3:p:263-284
    DOI: 10.1002/ijfe.272
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Quinn, Dennis & Voth, Hans-Joachim, 2008. "Free Flows, Limited Diversification: Explaining the Fall and Rise of Stock Market Correlations, 1890-2001," CEPR Discussion Papers 7013, C.E.P.R. Discussion Papers.
    2. M. Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2009. "Financial Globalization: A Reappraisal," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(2), pages 143-197, June.
    3. Honohan, Patrick, 2006. "Household financial assets in the process of development," Policy Research Working Paper Series 3965, The World Bank.
    4. Tanndal, Julia & Waldenström, Daniel, 2016. "Does Financial Deregulation Boost Top Incomes? Evidence from the Big Bang," IZA Discussion Papers 9684, Institute for the Study of Labor (IZA).
    5. Dennis P. Quinn & Hans-Joachim Voth, 2008. "A Century of Global Equity Market Correlations," American Economic Review, American Economic Association, vol. 98(2), pages 535-540, May.
    6. Maskus, Keith E. & Neumann, Rebecca & Seidel, Tobias, 2012. "How national and international financial development affect industrial R&D," European Economic Review, Elsevier, vol. 56(1), pages 72-83.
    7. Tanndal, Julia & Waldenström, Daniel, 2016. "Does Financial Deregulation Boost Top Incomes? Evidence from the Big Bang," CEPR Discussion Papers 11094, C.E.P.R. Discussion Papers.
    8. repec:gam:jsusta:v:9:y:2017:i:6:p:933-:d:100350 is not listed on IDEAS
    9. Tanndal, Julia & Waldenström, Daniel, 2016. "Does Financial Deregulation Boost Top Incomes? Evidence from the Big Bang," Working Paper Series, Center for Labor Studies 2016:2, Uppsala University, Department of Economics.
    10. Nurullah Gur, 2015. "Financial Integration, Financial Dependence and Employment Growth," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 493-500.
    11. Bos Jaap W.B. & Economidou Claire & Zhang Lu, 2011. "Specialization in the Presence of Trade and Financial Integration: Explorations of the Integration-Specialization Nexus," Research Memorandum 026, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    12. Eichengreen, Barry & Gullapalli, Rachita & Panizza, Ugo, 2011. "Capital account liberalization, financial development and industry growth: A synthetic view," Journal of International Money and Finance, Elsevier, vol. 30(6), pages 1090-1106, October.
    13. Tanndal, Julia & Waldenström, Daniel, 2016. "Does Financial Deregulation Boost Top Incomes? Evidence from the Big Bang," Working Paper Series 1106, Research Institute of Industrial Economics.
    14. William R. Cline, 2010. "Financial Globalization, Economic Growth, and the Crisis of 2007-09," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 499.
    15. Wilairat TONGSIRI & Hiroyuki KOSAKA, "undated". "Asian Financial Liberalization and its Impact using Asian International Input-Output Model," EcoMod2008 23800143, EcoMod.
    16. Gehringer, Agnieszka, 2015. "Uneven effects of financial liberalization on productivity growth in the EU: Evidence from a dynamic panel investigation," International Journal of Production Economics, Elsevier, vol. 159(C), pages 334-346.

    More about this item

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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