| Summary: | 碩士 === 國立成功大學 === 經濟學系碩博士班 === 96 === Based on the endogenous growth theory and empirical investigations, this paper examines the influence of controls on physical and financial capitals on economic growth and growth volatilities from 125 countries over the period from 1995 to 2006. We categorize countries into developed, developing and least developed ones to test whether controls on portfolio and physical capital inflows affect economic growth and growth volatilities differently. About empirical analysis, we use dynamic panel GMM and the definitions of capital control in 1996 by AREAER to verify the theoretical findings.
The theoretical results indicate that the values of real interest rate dominate the effect of capital control on economic growth rates. If the value of real interest rate is positive, financial capital control would enhance economic growth to prevent the default risk from disturbing the real economy. However, for high inflation or the least developed countries, the values of real interst rate are usually negative, then, controls on physical capital leads to faster economic growth. Empirical findings reveal that, before classification, controls on physical and portfolio capitals insulate the real economy from external shocks for all countries and the effect of financial capital control is effective. For developed countries, which have sound infrastructure and financial system, removing capital controls could improve economic growth. In contrast, for lower developed countries, controls on capital inflows, including portfolio and physical capital inflows, decrease speculative attacks and shelter the economy from shocks. In addition, for all countries, free capital mobility enhances risk sharing and reduces economic growth volatilities. Though, the impact is not significant except for lower development countries, including developing and the least developed countries.
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