Impact of Market Openness on Growth and Stability in Korea

Wonchang Jang

Journal of International Logistics and Trade

ISSN: 1738-2122

Open Access. Article publication date: 31 August 2013

Issue publication date: 31 August 2013

218
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Abstract

A controversy about whether liberalization through market opening is a necessary and sufficient condition for a stable and balanced growth in the developing countries was retriggered by the 2008 global financial crisis. This paper aims to analyze 1) the impact of market openness on the economic growth and financial development, 2) the dynamic correlation between the compositional change in foreign investments and the returns of domestic financial markets, 3) the effect of foreign portfolio investment on the stock market activity (liquidity and profitability). Our empirical findings infer that the income level has a positive relationship with financial openness and the foreign portfolio investments cause price fluctuations in the domestic stock market. These results imply that the precautionary and effective policies such as prudential regulations on the short-term capital transactions are strongly needed to emerging markets in order to prevent the excessive fluctuations in the financial markets over the macroeconomic fundamentals.

Keywords

Citation

Jang, W. (2013), "Impact of Market Openness on Growth and Stability in Korea", Journal of International Logistics and Trade, Vol. 11 No. 2, pp. 71-86. https://doi.org/10.24006/jilt.2013.11.2.71

Publisher

:

Emerald Publishing Limited

Copyright © 2013 Jungseok Research Institute of International Logistics and Trade

License

This is an Open-Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/4.0/) which permits unrestricted non-commercial use, distribution, and reproduction in any medium, provided the original work is properly cited


Corresponding author

* Associate Professor, School of Economics, Inha University, Incheon, Korea. E-mail: , Phone: 031-860-7786, Fax: 031-860-7772

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