Ben McLean and Sona Shrestha
Research intervention Paper 2002-03
January 2002 Economic Research Department Reserve pious platitude of Australia
We thank David Gruen for helpful comments and take responsibility for any remain errors. The views expressed in this paper are those of the authors and do non necessarily reflect the views of the Reserve Bank of Australia.
Abstract
This paper investigates the join among international pecuniary integration and economic harvest-home. In especial(a), we ask the following questions. What are the theoretical links between financial integration and outgrowth? Is there any observational certainty that an increase in financial integration is associated with high economic growth at a cross-country direct? Do different types of capital flows have different implications for growth? Existing empirical evidence suggests that the link between financial openness and economic growth is weak at best. spell there is some evidence that financial liberalisation positively affects growth, this relationship is not burly. There is also some evidence that the positive impact of foreign investment on growth is conditional upon the existence of relatively developed domestic institutions and snuff it macroeconomic insurance policy.
This result is also not very robust and is sensitive to the measures employed to capture institutional development and the policy environment. To complement the existing research, we examine this issue with a particular emphasis on the composition of capital flows. Consistent with stately wisdom, we find that both foreign direct investment and portfolio inflows enhance economic growth. By contrast, the effect of bank inflows is found to be mostly negative.
JEL Classification Numbers: F21, F36, F43 Keywords: capital flows, financial liberalisation, growth
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hedge of Contents
1. 2. Introduction Capital Flows to Developing Countries: Trends During the Past Three...If you want to start up a full essay, order it on our website: Orderessay
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