Does Openness to International Financial Flows Raise Productivity Growth?

This paper provides a comprehensive analysis of the relationship between financial openness and total factor productivity (TFP) growth using an extensive dataset that includes various measures of productivity and financial openness for a large sample of countries. We find that de jure capital accoun...

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Bibliographic Details
Main Author: Prasad, Eswar
Other Authors: Kose, Ayhan, Terrones, Marco
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2008
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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245 0 0 |a Does Openness to International Financial Flows Raise Productivity Growth?  |c Eswar Prasad, Marco Terrones, Ayhan Kose 
260 |a Washington, D.C.  |b International Monetary Fund  |c 2008 
300 |a 39 pages 
651 4 |a China, People's Republic of 
653 |a Finance: General 
653 |a Investments: Stocks 
653 |a Production and Operations Management 
653 |a Balance of payments 
653 |a Capital account 
653 |a Financial integration 
653 |a Total factor productivity 
653 |a Short-term Capital Movements 
653 |a Current Account Adjustment 
653 |a Financial Instruments 
653 |a Foreign direct investment 
653 |a International finance 
653 |a Finance 
653 |a International Investment 
653 |a Investment & securities 
653 |a Investments, Foreign 
653 |a Institutional Investors 
653 |a Exports and Imports 
653 |a Macroeconomics 
653 |a Pension Funds 
653 |a Non-bank Financial Institutions 
653 |a Stocks 
653 |a International economics 
653 |a Capital and Total Factor Productivity 
653 |a Capacity 
653 |a Long-term Capital Movements 
653 |a Production 
653 |a Cost 
653 |a General Financial Markets: General (includes Measurement and Data) 
653 |a Industrial productivity 
700 1 |a Kose, Ayhan 
700 1 |a Terrones, Marco 
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520 |a This paper provides a comprehensive analysis of the relationship between financial openness and total factor productivity (TFP) growth using an extensive dataset that includes various measures of productivity and financial openness for a large sample of countries. We find that de jure capital account openness has a robust positive effect on TFP growth. The effect of de facto financial integration on TFP growth is less clear, but this masks an important and novel result. We find strong evidence that FDI and portfolio equity liabilities boost TFP growth while external debt is actually negatively correlated with TFP growth. The negative relationship between external debt liabilities and TFP growth is attenuated in economies with higher levels of financial development and better institutions