cover_journal-of-international-economics.jpg

Total Factor Productivity Growth at the Firm-level: The Effects of Capital Account Liberalization

This study provides firm-level evidence on the effect of capital account liberalization on total factor productivity (TFP) growth. We find that a one standard deviation increase in the capital account openness indicator constructed by Fernández et al. (2016) is significantly associated with a 0.18 standard deviation increase in firms’ TFP growth rates. The productivity-enhancing effects are stronger for sectors with higher external finance dependence and capital-skill complementarity, and are persistent five years after liberalization. Moreover, we show that potential transmission mechanisms include improved financing conditions, greater skilled labor utilization, and technology upgrades. Finally, we document heterogeneous effects across firm size and tradability, and threshold effects with respect to the country's institutional quality.

01. November 2022

Authors Xiang Li Dan Su

Whom to contact

For Researchers

Professor Xiang Li, PhD
Professor Xiang Li, PhD
Economist

If you have any further questions please contact me.

+49 345 7753-805 Request per E-Mail

For Journalists

Mitglied der Leibniz-Gemeinschaft LogoTotal-Equality-LogoSupported by the BMWK