Stock Market Liberalizations and Export Dynamics

54 Pages Posted: 19 Jun 2018 Last revised: 30 Jun 2018

Melise Jaud

World Bank

Madina Kukenova

University of Lausanne - Department of Economics (DEEP)

Martin Strieborny

Lund University

Multiple version iconThere are 2 versions of this paper

Date Written: June 24, 2018

Abstract

We find that granting foreign investors access to domestic stock markets (so-called stock market liberalizations) facilitate efficiency-enhancing product specialization in the recipient countries. After countries allow foreign investors to acquire equity stakes in domestic firms, products that do not correspond to the liberalizing countries' comparative advantage disappear disproportionately faster from their export portfolios. At the same time, the overall long-term export performance of the liberalizing countries improves. Domestic stock market development does not play the same disciplining role in forcing termination of inefficient exports, suggesting a unique role for foreign investors in improving resource allocation in the real economy.

Keywords: stock market liberalizations, disciplining role of foreign investors, export dynamics

JEL Classification: G15, F65, O16

Suggested Citation

Jaud, Melise and Kukenova, Madina and Strieborny, Martin, Stock Market Liberalizations and Export Dynamics (June 24, 2018). Available at SSRN: https://ssrn.com/abstract=3184754 or http://dx.doi.org/10.2139/ssrn.3184754

Melise Jaud

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Madina Kukenova

University of Lausanne - Department of Economics (DEEP) ( email )

BFSH1
Lausanne, 1015
Switzerland
021-692-3673 (Phone)

Martin Strieborny (Contact Author)

Lund University ( email )

P.O. Box 7082
S-220 07 Lund
Sweden

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