Funding: Grant from the Fundação para a Ciência e a Tecnologia (FCT) and FEDER: 18 656 euros (Ref. PTDC/EGE-ECO/112169/2009)

Project's duration: January 2011 to December 2012.

Objectives:

The current phase of economic globalization has been characterized by progressive openness to international trade and an increased capital mobility across countries. This project deals with financial globalization and its relationship with economic growth.

The dramatic increase of financial globalization in the last decades may be assessed by the ratio of International Financial Integration (the sum of the stocks of foreign assets and liabilities over GDP). This ratio increased by a factor of 7, from 45% in 1970 to over 300% in 2004.

The neo-classical growth theory suggests that Financial Globalization would lead to a better allocation of resources, implying an increase of economic growth with capital going from industrial to developing countries, and also an increase of welfare. However, the literature found no robust empirical relationship between proxies of financial integration and economic growth.

We intend to contribute to this literature by answering the following questions:
1) Does the composition of foreign capital have an effect on the diffusion of technology and innovation and, through these channels, an effect on economic growth?
2) How important is the effect of the composition of foreign capital directly on total factor productivity?
3) Do we empirically observe that economies open to capital mobility grow relatively faster than closed economies?

Main results:

Articles published in international scientific journals:

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Project funded in the scope of: 

União Europeia - Fundos Estruturais                    Governo da República Portuguesa