Welfare implications of international financial integration

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    7 Citations (Scopus)

    Abstract

    Focusing on technology spillover from foreign direct investment (FDI) inflows, this paper investigates the welfare implications of financial integration. Calibrations of a neoclassical growth model with international technology diffusion show that when technology catch-up due to FDI inflows is considered, the welfare gains from financial integration substantially increase, which contrasts with the small gains from additional, capital-accumulation effects of financial integration. The estimates suggest that by further enhancing financial integration, emerging Asian economies, such as the People's Republic of China (PRC) and the largest four Association of Southeast Asian Nations (ASEAN) countries, will experience substantial welfare gains.

    Original languageEnglish
    Pages (from-to)235-245
    Number of pages11
    JournalJapan and the World Economy
    Volume24
    Issue number4
    DOIs
    Publication statusPublished - 2012 Dec

    Bibliographical note

    Funding Information:
    We thank Donghyun Park for helpful suggestions. We gratefully acknowledge financial support from the ADB .

    Keywords

    • Financial integration
    • Foreign direct investment
    • Technology diffusion

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics
    • Political Science and International Relations

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