Catching Up by ‘Deglobalizing’: Capital Account Policy and Economic Growth

Paul Bergin, Woo Jin Choi and Ju Hyun Pyun

No 30944, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: While substantial empirical research has evaluated the question of whether capital account openness promotes economic growth, this paper finds empirical evidence for cases where the opposite is true—that a policy of capital controls can promote economic growth, when combined with a policy of reserve accumulation. Using panel data from 45 countries from 1985–2019, we find that capital controls combined with reserve accumulation—strategic capital account policy—contribute to growth in real GDP and TFP. This effect is stronger for emerging markets and prior to the global financial crisis. We show that the policy is strongly associated with enlarging the scale of the manufacturing sector and productivity, and is consistent with theories of learning-by-doing through exporting.

JEL-codes: E58 F21 F31 F41 (search for similar items in EconPapers)
Date: 2023-02
New Economics Papers: this item is included in nep-fdg and nep-opm
Note: IFM
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Published as Paul R. Bergin & Woo Jin Choi & Ju H. Pyun, 2023. "Catching Up by ‘Deglobalizing’: Capital Account Policy and Economic Growth," Journal of International Money and Finance, .

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Journal Article: Catching up by ‘Deglobalizing’: Capital account policy and economic growth (2023)
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