In the month that the capital account is liberalized, all publicly traded firms experience a 7 percent stock price revaluation. Firms whose shares become eligible for purchase by foreigners experience an additional revaluation that is directly proportional to their firmspecific reduction in aggregate risk— the covariance of the typical firm’s stock return with the local market is on average 30 ...

Realization of comparative advantage (David Ricardo) raises issues of income distribution that emerge when specialization gains are achieved. While the Stolper-Samuelson theorem ‘predicts’ that because of trade liberalization in ‘rich countries’ like Austria or Germany wages may fall and real incomes of capital owners might increase, some doubts are raised whether continuous cuts in relative wa...

In light of the financial crises in the emerging markets, the coming-into-force of the financial services agreement under the GATS has been considered a success. While the agreement provides for little new liberalization but rather formalizes the status quo, it has been feared that governments could even backtrack on previous commitments in the belief that more open markets could increase the d...

the theoretical base of this paper is the economic growth model that completed with capital stocks (private and public) and human capital. at the first, hypothesis test about constant returns to scale is studied, and then the related variables with macroeconomic policies are added to the model. the results show that 1) the aggregate production function exhibits increasing returns to scale, 2) p...

that took place in the developing countries in the 1980s and 1990s was part of the general move toward giving markets a greater role in development. It was also a reaction to several factors specific to finance: the costs, corruption, and inefficiencies associated with using finance as an instrument of populist, state-led development; a desire for more financial resources; citizens’ demands for...

The objective of this paper is to assess both the aggregate growth effects and the distributional consequences of financial liberalization as observed in Thailand from 1976 to 1996. A general equilibrium occupational choice model with two sectors, one without intermediation and the other with borrowing and lending is taken to Thai data. Key parameters of the production technology and the distri...

Despite the political sensitivity of foreign capital, existing work on the effect of foreign capital at the firm level is slim. This paper examines the effect of foreign equity ownership and management on firm performance using a panel of Korean firms for the period of 1993-2007 when foreign capital inflows increased dramatically. Empirical results show that foreign equity ownership positively ...

There is little disagreement among most economists that countries benefit from trade liberalization. Yet, whether unilateral, multilateral (through the World Trade Organization) or through regional integration agreements (RIAs), trade liberalization has been one of the most controversial economic issues of our time. It is the focus of everyone from politicians to union leaders and anti-globaliz...

Empirical growth equations are typically explained by (i) the history of the exchange rate regimes, (ii) capital market liberalization regimes, and (iii) actual balance of payments crises. The literature on the effects of policy switches on growth typically ignores the effect of policy on the likelihood of crises, and, in turn, the effect of crises on growth. It ignored a key explanatory variab...