یکپارچه سازی مالی بین المللی و رشد اقتصادی

This paper uses new data and new econometric techniques to investigate the impact of international financial integration on economic growth and also to assess whether this relationship depends on the level of economic development, financial development, legal system development, government corruption, and macroeconomic policies. Using a wide array of measures of international financial integration for 57 countries and an assortment of statistical methodologies, we are unable to reject the null hypothesis that international financial integration does not accelerate economic growth even when controlling for particular economic, financial, institutional, and policy characteristics.

Theory provides conflicting predictions about the growth effects of international financial integration (IFI), i.e., the degree to which an economy does not restrict cross-border transactions. According to some theories, IFI facilitates risk-sharing and thereby enhances production specialization, capital allocation, and economic growth (Obstfeld, 1994 and Acemoglu and Zilibotti, 1997). Further, in the standard neoclassical growth model, IFI eases the flow of capital to capital-scarce countries with positive output effects. Also, IFI may enhance the functioning of domestic financial systems, through the intensification of competition and the importation of financial services, with positive growth effects (Klein and Olivei, 2000 and Levine, 2001). On the other hand, IFI in the presence of pre-existing distortions can actually retard growth.1Boyd and Smith (1992), for instance, show that IFI in countries with weak institutions and policies—e.g., weak financial and legal systems—may actually induce a capital outflow from capital-scarce countries to capital-abundant countries with better institutions. Thus, some theories predict that international financial integration will promote growth only in countries with sound institutions and good policies. Although theoretical disputes and the concomitant policy debate over the growth effects of IFI have produced a burgeoning empirical literature, resolving this issue is complicated by the difficulty in measuring IFI. Countries impose a complex array of price and quantity controls on a broad assortment of financial transactions. Thus, researchers face enormous hurdles in measuring cross-country differences in the nature, intensity, and effectiveness of barriers to international capital flows (Eichengreen, 2001). In practice, empirical analyses use either (i) proxies for government restrictions on capital flows or (ii) measures of actual international capital flows. The International Monetary Fund’s (IMF) IMF-restriction measure is the most commonly used proxy of government restrictions on international financial transactions. It classifies countries on an annual basis by the presence or absence of restrictions, i.e. it is a zero-one dummy variable. Quinn (1997) attempts to improve upon the IMF-restriction measure by reading through the IMF’s narrative descriptions of capital account restrictions and assigning scores of the intensity of capital restrictions. Unfortunately, the Quinn (1997) measure is only available for selected years for most countries (1958, 1973, 1982, and 1988). The advantage of the IMF-Restriction and Quinn (1997) measures is that they proxy directly for government impediments. The disadvantage of both measures, as noted above, stems from the difficulty in accurately gauging the magnitude and effectiveness of government restrictions. Empirical studies also use measures of actual international capital flows to proxy for international financial openness. The assumption is that more capital flows as a share of Gross Domestic Product (GDP) are a signal of greater IFI. The advantage of these measures is that they are widely available and they are not subjective measures of capital restrictions. A disadvantage is that many factors influence capital flows. Indeed, growth may influence capital flows and policy changes may influence both growth and capital flows, producing a spurious, positive relationship between growth and capital flows, and growth may affect capital flows. This highlights the need to account for possible endogeneity in assessing the growth IFI-relationship. Empirical evidence yields conflicting conclusions about the growth effects of IFI. Grilli and Maria Milesi-Ferretti, 1995 and Rodrik, 1998, and Kraay (1998) find no link between economic growth and the IMF-restriction measure. In contrast, Edwards (2001) finds that the IMF-restriction measure is negatively associated with growth in rich countries but positively associated with growth in poor countries. He thus argues that good institutions are necessary to enjoy the positive growth effects of IFI. Arteta et al. (2001), however, argue that Edwards’s results are not robust to small changes in the econometric specification. While Quinn (1997) finds that his measure of capital account openness is positively linked with growth, Arteta et al. (2001) and Kraay (1998) find these results are not robust. Finally, while some studies find that foreign direct investment (FDI) inflows are positively associated with economic growth when countries are sufficiently rich (Blomstrom et al., 1994), educated (Borenzstein et al., 1998), or financially developed (Alfaro et al., 2001), Carkovic and Levine (2002) find that these results are not robust to controlling for simultaneity bias.2 In the light of the current state of the literature on the growth effects of IFI, we contribute to existing empirical analyses in four ways. First, we examine an extensive array of IFI indicators. We examine the IMF-restriction measure and the Quinn measure of capital account restrictions. Furthermore, we examine various measures of capital flows: FDI, portfolio, and total capital flows. Moreover, we consider measures of just capital inflows as well as measures of total capital flows (inflows plus outflows) to proxy for IFI because openness is defined both in terms of receiving foreign capital and in terms of domestic residents having the ability to diversify their investments abroad. We examine a wide array of IFI proxies because each indicator has advantages and disadvantages. Second, we examine two new measures of IFI. Lane and Milesi-Ferretti (2002) carefully compute the accumulated stock of foreign assets and liabilities for an extensive sample of countries. Since we want to measure the average level of openness over an extended period of time, these stock measures provide a useful additional indicator. Furthermore, these stock measures are less sensitive to short-run fluctuations in capital flows associated with factors that are unrelated to IFI, and may therefore provide a more accurate indicator of IFI than capital flow measures. As proxies for IFI, we examine both the accumulated stock of liabilities (as a share of GDP) and the accumulated stock of liabilities and assets (as a share of GDP). Also, we break down the accumulated stocks of financial assets and liabilities into FDI, portfolio, and total financial claims in assessing the links between economic growth and a wide assortment of IFI indicators. Thus, we add these additional IFI indicators to the empirical examination of growth and international financial integration. Third, since theory and some past empirical evidence suggest that IFI will only have positive growth effects under particular institutional and policy regimes, we examine an extensive array of interaction terms. Specifically, we examine whether IFI is positively associated with growth when countries have well-developed banks, well-developed stock markets, well functioning legal systems that protect the rule of law, low levels of government corruption, sufficiently high levels of real per capita GDP, high levels of educational attainment, prudent fiscal balances, and low inflation rates. Thus, we search for economic, financial, institutional, and policy conditions under which IFI boosts growth. Fourth, we use newly developed panel techniques that control for (i) simultaneity bias, (ii) the bias induced by the standard practice of including lagged dependent variables in growth regressions, and (iii) the bias created by the omission of country-specific effects in empirical studies of the IFI-growth relationship. Since each of these econometric biases is a serious concern in assessing the growth-IFI nexus, applying panel techniques enhances the confidence we can have in the empirical results. Furthermore, the panel approach allows us to exploit the time-series dimension of the data instead of using purely cross-sectional estimators. Before beginning the analyses, it is important to mention a related strand of the literature on IFI. We examine the relationship between broad measures of IFI and growth. Other researchers focus instead on a much narrower issue: restrictions on foreign participation in domestic equity markets. Levine and Zervos (1998b) construct indicators of restrictions on equity transactions by foreigners. They show that liberalizing restrictions boosts equity market liquidity. Henry, 2000a and Henry, 2000b extends these data and shows that liberalizing restrictions on foreign equity flows boosts domestic stock prices and domestic investment. Bekaert et al. (2001) go farther and show that easing restrictions on foreign participation in domestic stock exchanges accelerates economic growth. While it is valuable to examine the impact of liberalizing restrictions on foreign activity in domestic stock markets, it is also valuable to study whether international financial integration in general has an impact on economic growth under particular economic, financial, institutional, and policy environments. This paper examines the relationship between economic growth and broad measures of IFI for a large cross-section of countries, while recognizing the value of studies that focus on specific barriers to particular categories of international financial transactions. The remainder of the paper is organized as follows. Section II discusses the data and presents summary statistics. Section III describes the econometric methodology while Section IV gives the results. Section V concludes.

This paper uses new data and new econometric techniques to investigate the impact of international fi nancial integration on economic growth and to assess whether the IFI-growth relationship depends on the level of economic development, educational attainment, fi nancial development, legal system development, govern- ment corruption, and macroeconomic policies. We contribute to the existing literature by (i) using new measures of international fi nancial integration, (ii) examining an extensive array of IFI indicators, (iii) employing econometric methods that cope with statistical biases that have plagued past studies of the IFI-growth relationship, and (iv) investigating, as suggested by some theories, whether IFI has only positive growth effects under particular economic, fi nancial, institutional, and policy regimes. In studying the IFI-growth relationship, the paper examines up to 57 countries over the last 20 – 25 years using an assortment of statistical methodologies. The data do not support the view that international fi nancial integration per se accelerates economic growth, even when controlling for particular economic, fi nan- cial, institutional, and policy characteristics. Note, however, these results do not imply that openness is unassociated with economic success. Indeed, IFI is positively associated with real per capita GDP, educational attainment, banking sector develop- ment, stock market development, the law and order tradition of the country, and government integrity (low levels of government corruption). Thus, successful coun- tries are generally open economies. Rather, this paper fi nds that IFI is not robustly linked with economic growth when using a variety of IFI measures and an assortment of econometric approaches. Similarly, although there are isolated exceptions, we do not reject the null hypothesis that IFI is unrelated to economic growth even when allowing this relationship to vary with economic, fi nancial, institutional, and macroe- conomic characteristics. This paper ’ s fi ndings must be interpreted cautiously. As emphasized in the intro- duction, there are extreme barriers to measuring openness to international fi nancial transactions. There are many different types of fi nancial transactions, countries impose a complex array of barriers, and the effectiveness of these barriers varies across countries, time, and type of fi nancial transaction. Although we use new meas- ures of IFI that improve upon past measures and although we use a more extensiveist of IFI measures than past studies, each of these measures may be criticized for not fully distinguishing international differences in barriers to fi nancial transactions. Given these quali fi cations, this paper fi nds that although international fi nancial inte- gration is associated with economic success (high levels of GDP per capita and strong institutions), the data do not lend much support to the view that international fi nancial integration stimulates economic growth.