Controls on international capital flows and effects in growth: Developing countries' samples

During the last few years a number of authors have argued that free capital mobility produces macroeconomic instability and contributes to financial vulnerability in the emerging nations. Controversy regarding the costs and benefits of globalization has taken center stage in policy and academic circles. While concerns over the benefits of capital mobility once voiced by John Maynard Keynes during the design of the Bretton Woods System were nearly forgotten in the 1970s and 1980s, the crises of the last decade have revived the debate over the merits of international financial integration. The most powerful argument in favor of international capital mobility, voiced by, among others, Stanley Fischer, Maurice Obstfeld, Kenneth Rogoff, and Larry Summers, is that it facilitates an efficient global allocation of savings by channelling financial resources to their most productive uses, thereby increasing economic growth and welfare around the world. But some other prominent academics are among the skeptics of international financial integration. But some other prominent academics are among the skeptics of international financial integration. Paul Krugman (1998), for example, argues that countries that experience full-blown crises should use capital controls. Dani Rodrik (1998) claims that international financial liberalization creates a higher risk of crises for developing countries.In this study examines the relationship between restrictions to capital mobility and external crises for 10 developing countries during the period 1985 to 2011. As a result of econometric studies, a cross sectionally dependence among panel data of countries have been achieved. Therefore, unit root estimations have been attained by using the first and second generation unit root tests. This note uses panel Levin-Lin ve Chu (LLC), Breitung, Im-Pesaran ve Shin (IPS), Fisher ADF, Fisher PP, Hadri, SURADF (Seemingly Unrelated Regression Augmented Dickey-Fuller Test), CADF (Cross-sectionally Augmented Dickey-Fuller) unit root tests. The empirical results from several panel-based unit-root test indicate that the per capita real GDP for all the countries studied are statistically significant non-stationary process. Within the scope of this study, Pedroni, Kao and Westerlund cointegration tests are analyzed as co-integration test; MG (Mean Group), PMG (Pooled Mean Group) and DOLS (Dynamic OLS) estimators to estimate long term parameters.