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The de facto capital openness shows that how much the country is really open for the financial and macroeconomic integration.
We find that FDI flows, our proxy for capital openness, are not significant determinants of the state's social spending, but labor openness, in the form of international migration, has a significant and even greater impact on some of the aforementioned categories than on total spending.
For robustness check here two additional variables (de facto capital openness and Asian crisis dummy) instead of de jure capital openness and net foreign assets are included.
Here, the de facto capital openness has negative effects similarly as de jure capital openness on current account in different country groups.
In Tables 6 and 7, this paper replaced the net foreign assent and de jure capital openness by Asian crisis dummy and de facto capital openness.
The coefficient of the de jure capital openness captures negative impact (−0.32).
Similar(35)
The variables are capital, trade openness and inflation, which usually enter in the growth regression.
Furthermore, there are several factors that may affect the business activities of a country, for example physical capital, trade openness and inflation.
It is suggested that the fact that FDI transmits technological knowledge, as well as contributing to the physical capital stock, openness to direct physical investment, as well as to trade and financial flows, provides an important driver of economic growth.
Instruments are the constant, GDP per capita in 1990, employment in industry, arable land per capita, gross fixed capital formation, openness, population growth, agricultural value added, political stability, dummy for small island developing states, primary school enrolment, secondary school enrolment and land area.
The order of variables is: GDP, capital, protein, openness and student-teacher ratio.
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