Growth and Structural Reforms; A New Assessment
Lone Engbo Christiansen,
Thierry Tressel () and
Martin Schindler ()
No 09/284, IMF Working Papers from International Monetary Fund
This paper presents a simultaneous assessment of the relationship between economic performance and three groups of economic reforms: domestic finance, trade, and the capital account. Among these, domestic financial reforms, and trade reforms, are robustly associated with economic growth, but only in middle-income countries. In contrast, we do not find any systematic positive relationship between capital account liberalization and economic growth. Moreover, the effect of domestic financial reforms on economic growth in middle-income countries is explained by improvements in measured aggregate TFP growth, not by higher aggregate investment. We present evidence that variation in the quality of property rights helps explain the heterogeneity of the effectiveness of financial and trade reforms in developing countries. The evidence suggests that sufficiently developed property rights are a precondition for reaping the benefits of economic reform. Our results are robust to endogeneity bias and a number of alternative specifications.
Keywords: Economic models; Economic reforms; Cross country analysis; Economic growth; Capital account; International financial system; International trade; Fiscal policy; Globalization; Governance; Trade liberalization; Liberalization, Domestic Finance, Trade: Capital Account, tfp, real gdp, trade reforms, gdp per capita, (search for similar items in EconPapers)
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Journal Article: Growth and structural reforms: A new assessment (2013)
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