Question

Use the data using the Lane and Milesi-Ferrtti index to compare the following countries in their de facto openness for the period 2000-2010. USA, China, Germany, Brazil, India, Russia, Phillipines. The Data is too much for me to be able to paste it here, If you dont have access to it, can you tell me how to get the "De Facto Openness" or how to calculate it?

Answer 1

Trade and financial openness are measured by the level of export, import and capital that called de facto measurement.

Rajan and Zingales measured both openness (trade and capital flows) and financial development in de facto terms.

• The sum of foreign assets and liabilities over GDP has been proposed as a measure of de facto financial openness. It considers only private cross-border assets and liabilities. By excluding reserve assets at central banks and liabilities stemming from development aid, our measure aims at capturing the degree to which a country is integrated in the international financial markets without the help of official capital flows. This measure might better capture private agents’ access to international financial resources. It has been widely used in empirical applications, both as dependent variable and covariate explaining, for instance, economic growth, crisis incidence and economic productivity.

• The simplest and usual index for measuring trade openness is de facto trade opennes. It is the ratio of trade (sum of export and import) to the Gross Domestic Product (GDP) of country.