Publication: Financial Development and International Trade : Is There a Link?
The author explores a possible link between financial development and trade in manufactures. His theoretical model focuses on the role of financial intermediaries in facilitating large-scale, high-return projects. Results show that economies with better developed financial sectors have a comparative advantage in manufacturing industries. He provides evidence for this hypothesis, first proposed by Kletzer and Bardhan (1987), using a 30-year panel of data for 65 countries. Controlling for country-specific effects and possible reverse causality, he shows that financial development exerts a large causal impact on the level of both exports and the trade balance of manufactured goods.
“Beck, Thorsten. 2001. Financial Development and International Trade : Is There a Link?. Policy Research Working Paper;No. 2608. © World Bank, Washington, DC. http://hdl.handle.net/10986/19656 License: CC BY 3.0 IGO.”
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