Multilateral trade liberalization boosts financial openness for low-income countries.
Multilateral trade liberalization can lead to increased financial openness in low-income and old industrialized countries. However, for other countries, the effect may be negative due to lacking necessary institutions and financial systems. This means that some countries limit their capital account openness while trying to maximize benefits from trade liberalization. Overall, greater cooperation on trade matters would be particularly beneficial for low-income countries.