In the early and mid-1990s, most economists and policymakers supported rapid capital account liberalization for emerging markets. Liberalization was expected to have widespread benefits. It was predicted to increase capital inflows, thereby financing investment and raising growth. Capital inflows—especially in the form of direct investment—would provide improved technology and management techni...

Using a new dataset of 369 manufacturing firms in developing countries, we present the first firm-level analysis of capital account liberalization and investment. In the three-year period following liberalizations, the growth rate of the typical firm’s capital stock exceeds its preliberalization mean by an average of 4.1 to 5.4 percentage points per year. We use a simple model of Tobin’s q to d...

China has been experiencing financial repression for a long time. The main feature of this repression is a regulated interest rate system. This results in private firms’ low likelihood of getting money from the official banking system, and at the same time seeded the emergence of the shadow banks, which introduces uncontrollable risks into the Chinese economy. Also, other policy goals, such as ...

One of the disputed consequences of global economic integration is the possible effect that foreign economic liberalization exerts on social cohesion. Proponents of commercial liberalism see stabilization as an indirect consequence of growing economic interdependence, while globalization critics are much more skeptical. They expect, at least during the liberalization process, destabilizing effe...

Contrary to the predictions of standard economic theory, capital market liberalization has been a mixed blessing for many countries. Liberalization of debt inflows exposes economies to the risk of crises stemming from sudden changes in investor sentiment. Equity market liberalizations, on the other hand, have promoted growth in almost every liberalizing country. Yet equity market liberalization...

Contrary to the predictions of standard economic theory, capital market liberalization has been a mixed blessing for many countries. Liberalization of debt inflows exposes economies to the risk of crises stemming from sudden changes in investor sentiment. Equity market liberalizations, on the other hand, have promoted growth in almost every liberalizing country. Yet equity market liberalization...

In recent y ears there has been a revival of interest in the trade-growth nexus. A number of authors have suggested that regional economic integration and liberalization of international trade are likely to have positive eects not only on productivity levels but also on long-term productivity growth rates in developing countries. Using a panel of Mexican manufacturing industries, this paper exa...

This paper investigates the dynamic conditional correlations (DCC) of stock returns between China and international markets. Statistics suggest that stock-return correlations across markets are time-varying, displaying a structural change triggered by an upward shift in China’s adoption of financial liberalization and the occurrence of the worldwide financial crisis. The dynamic correlations ar...

Studying the relation between equity market liberalization and imports of capital goods, we examine one channel through which international financial integration can promote growth. For the period 1980-1997, we find that after controlling for other policies and fundamentals, stock market liberalizations are associated with a significant increase in the share of imports of machinery and equipmen...

Recent financial liberalization in Taiwan has caused local banks to face major structural changes. This paper examines the cost structure of 36 local banks in Taiwan using the translog cost function and attempts to identify suitable operating strategies for cost reduction and performance improvements. Results indicate scale economies for small and large-sized banks and scope economies for all b...