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Stock Market Liberalizations and Export Dynamics

Melise Jaud, Madina Kukenova and Martin Strieborny

Working Papers from Business School - Economics, University of Glasgow

Abstract: We find that foreign investors facilitate efficiency-enhancing structural change in the recipient countries. After countries liberalize their stock markets and allow foreign investors to acquire equity stakes in domestic firms, products that do not correspond to the liberalizing countries' comparative advantage disappear disproportionately faster from their export portfolios. At the same time, the overall long-term export performance of the liberalizing countries improves. Domestic stock market development does not play the same disciplining role in forcing termination of inefficient exports, suggesting a unique role for foreign investors in improving resource allocation in the real economy.

Keywords: financial liberalization and structural change; disciplining role of foreign investors; export dynamics (search for similar items in EconPapers)
JEL-codes: F65 G15 O16 (search for similar items in EconPapers)
Date: 2021-08
New Economics Papers: this item is included in nep-cfn, nep-cwa, nep-fdg, nep-int and nep-isf
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