Capital Account Liberalization and Economic Growth in Developing Economies: An Empirical Investigation

Soumia Zenasni () and Abderrezak Benhabib ()
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Soumia Zenasni: University of Tlemcen, Algeria
Abderrezak Benhabib: University of Tlemcen, Algeria

No 40-2012, Global Financial Markets Working Paper Series from Friedrich-Schiller-University Jena

Abstract: The objective of this paper is to investigate the empirical relationship between capital account liberalization and economic growth in three Maghreb countries (Algeria, Mo- rocco, and Tunisia) using the GMM technique. The study of this relationship has al- ways been of particular interest (Alesina and al 1994; De Gregorio 1996; Edwards 2001; Agénor 2001; Ishii and Habermeier 2002; Prasad and al. 2003; Buiter and Taci 2003; Henry 2007; Dhrifi 2009; Eichengreen, Gullapalli and Panizza 2009; Bakare A. S. 2011; Vithessonthi and Tongurai 2012). The results are mitigated and can be classified into two categories: negative and positive effects. As a matter of fact, some authors have showed that capital account liberalization hasn't a significant effect on economic growth (Grilli and Milesi-Ferretti 1995; Rodrick 1998; Kraay 1998; O'Donnell 2001; Edison and al. 2002). On the contrary, several theoretical and empirical studies assert that capital account liberalization can help countries to improve significantly their eco- nomic growth rate (Gurley and Shaw 1955, McKinnon 1973; Quinn 1997; Levine and Zervos 1998; Chan-Lau and Chen 2001; Bekaert and al. 2005; Levchenko and al. 2008; Mensi and al. 2010, Hassana, Sanchezb & Yu 2011). The estimation results show that capital account liberalization is a good factor in fostering economic growth in Maghreb countries.

Keywords: capital account liberalization; financial development; economic growth; Maghreb countries; GMM technique (search for similar items in EconPapers)
JEL-codes: C33 E44 F43 G20 (search for similar items in EconPapers)
Date: 2013-08-22
New Economics Papers: this item is included in nep-ara, nep-fdg and nep-mac
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