Capital account liberalization and foreign direct investment

Capital Account Liberalization, Free Long-term Capital Flows, Financial Crises and Economic Development

The main objective of this paper is to review the theoretical issues and available empirical evidence on capital account liberalization. In addition to being of interest in its own right, capital account liberalizations is important to the debate on the New International Financial Architecture (NIFA) and to the post-Doha agenda at the World Trade Organization (WTO) in relation to foreign direct...

Capital Controls, Liberalizations, and Foreign Direct Investment

Multinational firms circumvent capital controls by distorting their reported trade patterns, profitability, and dividend repatriations. The changed patterns of reported profits in response to capital controls are comparable to the effects of a 24% difference in corporate tax rates. The costliness of these acts of evasion combined with the significantly higher interest rates faced by multination...

Liberalization of Capital Account with China’s Characteristics

1. Introduction Unlike other crisis-hit developing countries (Mexico, Korea, Thailand and Brazil) known by their large-scale utilization of foreign capital, China weathered the storm in 1997 safe and sound. However, some analysts said that China would have involved itself into the crisis if the Asian financial crisis came two years later. Many academic papers like Huang and Yang (1998) attribut...

Capital Account Liberalization, The Cost of Capital, and Economic Growth

Capital-account liberalization was once seen as an inevitable step along the path to economic development for poor countries. Liberalizing the capital account, it was said, would permit financial resources to flow from capitalabundant countries, where expected returns were low, to capital-scarce countries, where expected returns were high. The flow of resources into the liberalizing countries w...

Capital Account Liberalization: Allocative Efficiency or Animal Spirits?

In the year that capital-poor countries open their stock markets to foreign investors, the growth rate of their typical firm’s capital stock exceeds its pre-liberalization mean by 4.1 percentage points. In each of the next three years the average growth rate of the capital stock for the 369 firms in the sample exceeds its pre-liberalization mean by 6.1 percentage points. However, there is no ev...

An Examination Of Economic Liberalization Impact On Foreign Direct Investment In Selected Developing Countries