Capital Mobility and Economic Performance: Are Emerging Economies Different?

34 Pages Posted: 14 Jan 2001 Last revised: 28 Jul 2022

See all articles by Sebastian Edwards

Sebastian Edwards

University of California, Los Angeles (UCLA) - Global Economics and Management (GEM) Area; National Bureau of Economic Research (NBER)

Date Written: January 2001

Abstract

In this paper I use a new cross-country data set to investigate the effects of capital mobility on economic growth. The new indicator of capital mobility used in this analysis is superior to previously used indexes in two respects: (1) It allows for intermediate situations, where a country's capital account is semi-open; and (2) it is available for two different periods in time. The results obtained suggest that, after controlling for other variables (including aggregate investment), countries with a more open capital account have outperformed countries that have restricted capital mobility. There is also evidence, however, suggesting that an open capital account positively affects growth only after a country has achieved a certain degree of economic development. This provides support to the view that there is an optimal sequencing for capital account liberalization.

Suggested Citation

Edwards, Sebastian, Capital Mobility and Economic Performance: Are Emerging Economies Different? (January 2001). NBER Working Paper No. w8076, Available at SSRN: https://ssrn.com/abstract=256082

Sebastian Edwards (Contact Author)

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