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Title: Capital Account Convertibility and Growth: A Developing Country Perspective
Authors: Seth, A. K.
Varma, Sumati
Keywords: Capital movements
Economic development
Developing countries
Issue Date: 2009
Publisher: Indian Institute of Management Calcutta, Kolkata
Series/Report no.: Vol.36;No.1
Abstract: This paper investigates the link between capital account liberalization and growth for a cross - section of seventeen developing countries, including India, both theoretically and empirically. It also explores the different measures of capital account openness and the empirical evidence on the association between financial openness and growth. Theoretically, capital account openness leads to growth through two main channels: increase in aggregate investment and an improvement in productivity and efficiency. Existing empirical evidence however suggests that the link between capital account openness and economic growth is weak. The paper uses a de jure measure of capital account convertibility, calculated as the proportion of capital flows to total flow of funds. The results find a positive association between financial openness and growth. However growth is associated with an increase in the efficiency of inputs rather than due to an increase in investment per se.
Description: Biosketch: Professor, Department of Commerce, Delhi School of Economics, University of Delhi, New Delhi ; Sri Aurobindo College, University of Delhi, New Delhi.
p55-71. 17p. 7 Charts.
ISSN: 0304-0941
Appears in Collections:Issue 1, April-June 2009

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