Does Financial Openness Promote Economic Integration?: Some Evidence from Europe and the CIS

Fabrizio Carmignani () and Abdur Chowdhury ()

No RP2005-74, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: 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.

Keywords: Econometric models (Economic development); Economic integration; International finance; International trade (search for similar items in EconPapers)
Date: 2005
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