International Financial Liberalization and Industry Growth
Stockholm University - Department of Economics
Research Institute of Industrial Economics
International Journal of Finance & Economics, 2005
The growth effects of international financial liberalization are investigated using the methodology and data developed by Rajan and Zingales (1998). The main result is that industries highly dependent on external financing do not experience higher growth in value added in countries with liberalized financial markets. Liberalization does, however, increase the growth rates of both production and firm creation among externally dependent industries - given that countries have reached a relatively high level of financial development. These results are consistent both with increased competition and increased outsourcing.
Keywords: Financial liberalization, financial integration, economic growth, outsourcing
JEL Classification: F3, G1, O4
Date posted: February 14, 2005
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