Capital Account Openness and the Varieties of Growth Experience

32 Pages Posted: 18 Feb 2003 Last revised: 18 Dec 2022

See all articles by Michael W. Klein

Michael W. Klein

Tufts University - The Fletcher School of Law and Diplomacy; National Bureau of Economic Research (NBER)

Date Written: February 2003

Abstract

The effects of capital account openness on economic growth may vary across countries. Some countries may not have in place the constellation of institutions required to fully benefit from open capital accounts. Other countries may realize only small marginal improvements in the wake of capital account liberalization. This paper presents evidence of an inverted-U shaped relationship between the responsiveness of growth to capital account openness and income per capita. Middle-income countries benefit significantly from capital account openness. However, neither rich nor poor countries exhibit statistically significant positive effects. A similar inverted-U shaped relationship is found between the responsiveness of growth to capital account openness and various indicators of government quality.

Suggested Citation

Klein, Michael W., Capital Account Openness and the Varieties of Growth Experience (February 2003). NBER Working Paper No. w9500, Available at SSRN: https://ssrn.com/abstract=381320

Michael W. Klein (Contact Author)

Tufts University - The Fletcher School of Law and Diplomacy ( email )

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