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The influence of capital controls on the foreign direct investment

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Frame of Image rols on the Foreign Direct Investment
financial structure experienced severe financial crises. Thus, there has been debate regarding the benefits and costs of capital account liberalization during recent years. Much of the previous literature analyzed the effects of capital account liberalization focusing on macroeconomic evidence of various countries. However these studies were inconclusive on the benefits of capital account liberalization. The new focus on microeconomic evidence has been more successful. The following discusses some of the previous studies. Forbes(2003) studies the Chilean capital controls using the GMM estimation t e c h n i q u e . Data are divided into 3 sample periods which are pre-encaje(1988~1993), encaje(1992~1997), and post-encaje(1998~2001).1) Forbes(2003) uses two methodologies: Tobin’s q and Euler-equation methods. Using different firm size, she concludes “… during the encaje, smaller firms in Chile experienced significant financial constraints and these constraints decreased as firm size increased.” owever, no such evidence is found before H or after the encaje. Because of the problems due to the small size of dataset, the drawback of GMM estimation, and the definition of variables used in the
1) Encaje is the name of market-based tax on capital inflows adapted by Chile from 1991~98.
10
KIET Industrial Economic Review
estimation, she tests sensitivity problem extensively. For the sensitivity tests, she uses modified variables, many model specifi


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Title The influence of capital controls on the foreign direct investment
Similar Titles
Material Type Reports
Author(English)

Kim, Soodong

Publisher

[Seoul]:Korea Institute for Industrial Economics & Trade

Date 2008
Journal Title; Vol./Issue KIET Industrial Economic Review:vol. 13(no. 1)
Pages 8
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Direct Investment
Holding KIET; KDI School

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