Emerging equity markets and economic development

We provide an analysis of real economic growth prospects in emerging market s after financial liberalizations. We identify the financial liberalization dates and examine the influence of liberalizations while controlling for a number of other macroeconomic and financial variables. Our work also intro duces an econometric methodology that allows us to use extensive time-serie s as well as cross-sectional information for our tests. We find across a nu mber of different specifications that financial liberalizations are associa ted with significant increases in real economic growth. The effect is large r for countries with high education levels. (C) 2001 Elsevier Science B.V. All rights reserved.