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Stock Market Liberalizations and Export Dynamics

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  • Melise Jaud
  • Madina Kukenova
  • Martin Strieborny

Abstract

We find that foreign investors facilitate efficiency-enhancing structural change in the recipient countries. After countries liberalize their stock markets and allow foreign investors to acquire equity stakes in domestic firms, products that do not correspond to the liberalizing countries' comparative advantage disappear disproportionately faster from their export portfolios. At the same time, the overall long-term export performance of the liberalizing countries improves. Domestic stock market development does not play the same disciplining role in forcing termination of inefficient exports, suggesting a unique role for foreign investors in improving resource allocation in the real economy.

Suggested Citation

  • Melise Jaud & Madina Kukenova & Martin Strieborny, 2021. "Stock Market Liberalizations and Export Dynamics," Working Papers 2021_15, Business School - Economics, University of Glasgow.
    • Handle: RePEc:gla:glaewp:2021_15
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    More about this item

    Keywords

    financial liberalization and structural change; disciplining role of foreign investors; export dynamics;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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