New evidence of the impact of capital account liberalization on economic growth
This article analyzes the effects of financial liberalization on economic growth, focusing mainly the empirical aspects of this line of research. The text aims to answer fundamental questions put forward by recent literature: What effects has capital account liberalization had on economic growth? Has liberalization affected equally both developed and developing countries? What sort of private capital flow has had the greatest impact on growth? To answer these questions, the most relevant recent empirical studies are reviewed, analyzing not only their econometric results but also their methodologies. Then, econometric estimates are performed, bringing to light new evidence on the issue. They are more conclusive than previous results found in the literature, showing that liberalization has a positive and uniform effect on growth: evidence shows that an increase in the capital flow, both FDI and other forms of private capital, has benefited global economic growth, even in developing nations. This result can be attributed mainly to the use of better-suited estimation methods. This estimation was possible thanks to the availability of a capital account liberalization indicator for a relatively large sample of countries and an extensive period of time
|Date of creation:||11 Aug 2004|
|Date of revision:|
|Contact details of provider:|| Phone: 1 212 998 3820|
Fax: 1 212 995 4487
Web page: http://www.econometricsociety.org/pastmeetings.asp
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Manuel Arellano & Stephen Bond, 1991.
"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
Review of Economic Studies,
Oxford University Press, vol. 58(2), pages 277-297.
- Tom Doan, . "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
- JosÃ© Ricardo Santana & Fernando Garcia, 2004. "World financial liberalization and its effects on capital flows," Econometric Society 2004 Latin American Meetings 101, Econometric Society.
- N. Gregory Mankiw & David Romer & David N. Weil, 1990.
"A Contribution to the Empirics of Economic Growth,"
NBER Working Papers
3541, National Bureau of Economic Research, Inc.
- Stiglitz, Joseph E., 2000. "Capital Market Liberalization, Economic Growth, and Instability," World Development, Elsevier, vol. 28(6), pages 1075-1086, June.
- Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
- Soto, Marcelo, 2003. "Taxing capital flows: an empirical comparative analysis," Journal of Development Economics, Elsevier, vol. 72(1), pages 203-221, October.
- Greenaway, David & Morgan, Wyn & Wright, Peter, 2002. "Trade liberalisation and growth in developing countries," Journal of Development Economics, Elsevier, vol. 67(1), pages 229-244, February.
- Robert J. Barro & Paul M. Romer, 1991.
National Bureau of Economic Research, Inc, number barr91-1.
- Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1127-1170.
- Barro, Robert J & Lee, Jong Wha, 1996. "International Measures of Schooling Years and Schooling Quality," American Economic Review, American Economic Association, vol. 86(2), pages 218-23, May.
When requesting a correction, please mention this item's handle: RePEc:ecm:latm04:86. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)
If references are entirely missing, you can add them using this form.