International Financial Integration and Economic Growth

Abstract

This paper uses new data and new econometric techniques to investigate the impact of international financial integration on economic growth and also to assess whether this relationship depends on the level of economic development, financial development, legal system development, government corruption, and macroeconomic policies. Using a wide array of measures of international financial integration on 57 countries and an assortment of statistical methodologies, we are unable to reject the hypothesis that international financial integration does not accelerate economic growth even when controlling for particular economic, financial, institutional, and policy characteristics.Economic growth;Foreign direct investment;capital flows, capital inflows, international financial, international financial integration, financial integration, capital account liberalization, stock market, capital account restrictions, international capital flows, flows of capital, inflation rate, consumer price index, international financial statistics, international capital, capital outflows, international financial transactions, capital controls, foreign assets, financial markets, capital outflow, foreign capital, capital flow, capital account transactions, capital restrictions, international finance, capital mobility, foreign liabilities, domestic equity, financial intermediation, capital control, capital-abundant countries, stock exchanges, capital stock, gross domestic product, current account deficits, stock transactions, international financial liberalization, equity prices, capital accounts, international financial system