Welfare implications of international financial integration

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4 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

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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