Cover IMF Working Papers
Growth and Structural Reforms: A New Assessment
Author: Lone Engbo Christiansen, Mr. Thierry Tressel, and Mr. Martin Schindler
Series:
IMF Working Papers
Volume/Issue:
Volume 2009: Issue 284
Language:
English
Publication Date:
01 Dec 2009
DOI:
https://doi.org/10.5089/9781451874297.001
ISBN:
9781451874297
ISSN:
1018-5941
Pages:
52
Keywords:
WP; liberalization index; dependent variable; capital account reform
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund