Study On The Impact Of Capital Account Opening On Total Factor Productivity

In the context of economic globalization,China needs to further expand its opening up to the outside world to achieve high-quality development,of which financial opening is a major component of the opening up.As one of the important elements of financial opening,capital account liberalization helps China align with international financial markets and systems,and has an important impact on the further internationalization of RMB and the implementation of the Belt and Road Initiative.Capital account liberalization is not only conducive to China’s active participation in international economic activities,but also conducive to improving China’s international competitiveness and promoting the internationalization of the RMB.In addition,according to Thoreau’s neoclassical economic growth model,economic growth depends on the input of capital,labor and other production factors and technological progress.Under the premise of a certain amount of production factor input,the improvement of resource allocation efficiency and total factor productivity is undoubtedly an important power source to promote the high-quality development of China’s economy.Therefore,it is of great practical significance to study the economic benefits of capital account opening under the realistic background that China continues to steadily promote financial opening.The 14 th Five-Year Plan further points out that we will continue to steadily promote two-way financial openness and respond to the increasingly complex and severe international environment with a higher level of financial openness.In this context,this paper uses transnational panel data to conduct empirical analysis,explore the impact effect and internal mechanism of capital account opening policy and total factor productivity,and further conduct threshold test on this basis.Based on panel data of 71 countries from 1996 to 2017,this paper systematically studies the impact of capital account openness on total factor productivity from both theoretical and empirical levels.Study found that: first of all,open capital account overall significantly increased the total factor productivity,this conclusion in considering endogenous and economic fluctuation,replace,be explained variables measuring method,explained the core measure,sample stage test for five years and three years of testing sample stage to estimate after a series of robustness tests,the conclusion remains robust.Secondly,further mechanism analysis and test show that capital account opening can promote the improvement of total factor productivity through direct channels and indirect channels,in which the direct channel is divided into capital allocation and foreign capital spillover,and the indirect channel is divided into financial market development and institutional quality improvement.Further research shows that the impact of classified capital account openness and different types of capital flow directions on TFP of countries with different income levels is different,and the impact on TFP of high-income countries is more significant.Finally,in view of the differences in the effect of capital account openness on total factor productivity among countries,the threshold test finds that only when a country’s economic development level and openness cross the corresponding threshold value can capital account openness play a role in improving total factor productivity.Although China in general has not yet met the requirements for full capital account liberalization,Shanghai,Beijing and Guangdong have done so,which will provide an empirical basis for the economic effects of capital account liberalization in China.