We study whether financial openness facilitates the economic integration of formerly centrally planned economies with the EU-15. Two dimensions of economic integration are considered: cross-country convergence of per-capita incomes and bilateral trade in goods and services. We find that more financially open economies effectively catch-up faster and trade more with the EU-15. These integrationenhancing effects occur over and above any effect stemming from domestic financial deepening and other factors determining growth and trade.Economic integration, financial openness, gravity models, catching-up
To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.