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Does Financial Openness Promote Economic Integration?, Fabrizio Carmignani, Abdur Chowdhury
Does Financial Openness Promote Economic Integration?, Fabrizio Carmignani, Abdur Chowdhury
Abdur R. Chowdhury
We estimate the effect of financial openness on economic integration for two clusters of countries: the formerly planned economies of Eastern Europe and central Asia (emerging market economies) and some western advanced economies. We focus on two dimensions of economic integration: convergence of per-capita incomes across countries and trade integration. We employ both single equation estimation and system estimation to account for endogenous links between trade integration and income convergence. Results show that in the cluster of emerging market economies, financial openness is a powerful instrument of economic integration. In the group of advanced economies, financial openness effectively facilitates income …
The Impact Of Financial Openness On Economic Integration: Evidence From Europe And The Cis, Fabrizio Carmignani, Abdur Chowdhury
The Impact Of Financial Openness On Economic Integration: Evidence From Europe And The Cis, Fabrizio Carmignani, Abdur Chowdhury
Abdur R. Chowdhury
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 integration-enhancing effects occur over and above any effect stemming from domestic financial deepening and other factors determining growth and trade.