This paper develops a theoretical and empirical analysis regarding the relationship between financial integration and long-run economic growth. Using data for a sample of 105 countries over the period 1980-2004, will be estimated growth equations specified in the form of a dynamic panel data model. The theoretical literature analysis clarifies the fragility of the theoretical framework that fundaments the hypothesis that financial integration stimulates long-run economic growth. The econometrical evidences presented do not corroborate the hypothesis that financial integration stimulates the long-run economic growth, even for countries with high levels of institutional development, of financial development, of trade openness, of macroeconomic stability and of exchange rate arrangement flexibility. These results question the rationale underlying the policy recommendations for the elimination of capital controls.
Financial Integration; Capital Flows; Economic Growth
