What the study found
The study found an inverted U-shaped relationship between capital account openness and economic growth in emerging market economies. In this setting, moderate openness was linked to stronger growth, while very high openness was linked to weaker growth.
Why the authors say this matters
The authors conclude that the findings offer guidance for China’s Fifteenth Five-Year Plan, suggesting a need to balance openness with stability. They also report that effective institutions may help reduce the negative effects of excessive openness.
What the researchers tested
The researchers used panel data, which means repeated data from multiple countries over time, from emerging market economies between 1980 and 2022. They examined the relationship between capital account openness and economic growth, along with the mechanisms behind it.
What worked and what didn't
Moderate capital account openness appeared to support economic growth. The study also identified a financing promotion–risk accumulation pathway, with short-term external debt serving as an important mechanism. Extreme openness appeared to impede growth, and effective institutions were reported to mitigate that negative effect.
What to keep in mind
The abstract does not describe detailed model settings, country coverage, or robustness checks beyond the panel-data period and setting. The summary also does not provide exact effect sizes or specific institutional measures.
Key points
- The study reports an inverted U-shaped relationship between capital account openness and economic growth.
- Moderate openness is associated with higher growth, while excessive openness may hinder growth.
- A financing promotion–risk accumulation pathway is identified as part of the mechanism.
- Short-term external debt is described as a crucial mechanism in the analysis.
- Effective institutions are reported to reduce the negative effects of excessive openness.
Disclosure
- Research title:
- Capital account openness shows an inverted U-shaped link with growth
- Authors:
- Yingjie Liu, Binghui Zhu, Bingxin Liu, Chi Zhang
- Institutions:
- Great Wall Motors (China), Henan University of Economic and Law, Henan University of Economic and Law, Zhongyuan University of Technology
- Publication date:
- 2026-03-10
- OpenAlex record:
- View
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