IMF Working Papers

International Financial Integration and Economic Growth

ByTorsten M Sloek, Hali J Edison, Luca A Ricci, Ross Levine

August 1, 2002

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Torsten M Sloek, Hali J Edison, Luca A Ricci, and Ross Levine. "International Financial Integration and Economic Growth", IMF Working Papers 2002, 145 (2002), accessed 12/5/2025, https://doi.org/10.5089/9781451856552.001

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper uses new data and new econometric techniques to investigate the impact of international financial integration on economic growth and also to assess whether this relationship depends on the level of economic development, financial development, legal system development, government corruption, and macroeconomic policies. Using a wide array of measures of international financial integration on 57 countries and an assortment of statistical methodologies, we are unable to reject the hypothesis that international financial integration does not accelerate economic growth even when controlling for particular economic, financial, institutional, and policy characteristics.

Subject: Balance of payments, Capital account, Capital flows, Capital inflows, Financial institutions, Financial integration, Financial markets, Multilateral development institutions, Stocks

Keywords: capital flow, Capital flows, Capital inflows, country observation, Developing Countries, Economic Growth, Financial integration, Foreign Direct Investment, government balance, growth IFI-relationship, IFI indicator, IFI-growth relationship, IMF restriction, IMF-restriction measure, International Finance, least squares, Multilateral development institutions, origin country, Portfolio Investment, State power, Stocks, WP

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