Globalization and Economic Growth: A Sustainability Analysis for South Asian Countries

Abstract

The effect of globalization on national economies remain a subject of empirical interest. Owing to the spillovers via globalization effects, a number of economies in the South Asian region have recorded phenomenal economic growth. However, the extent to which economic growth can influence development outcomes remains the issue of interest. Therefore, this study adds to the literature by examining the time and modulative effects of economic globalization on some direct regressors of economic growth. The study focused on eight South Asian countries from 1996 to 2019 for which data on globalization were sourced from Konjunkturforschungsstelle Globalization index, World Governance Indicators and International country risk database. A pooled autoregressive-distributed lag (ARDL) approach was utilized in addressing the objective of this study.Consequently, the findings suggest that while globalization influences economic growth positively, rising interest rates and inflationary pressures can unsustain this influence. Likewise, the modulated estimates show that economic globalization can be utilized as a tool to stimulate investment as well as to check corruption and subsequently sustain economic growth in South Asian economies.

Does globalization matter in the relationship between renewable energy consumption and economic growth, evidence from Asian emerging economies

“…Moreover, the negative impact of economic globalization on economic growth is caused by weak institutions in emerging economies, which is consistent with [ 70 , 124 , 125 ]. This result is consistent with [ 70 , 74 , 126 ], also contradicting [ 75 , 127 , 128 ]. Moreover, weak institutions and governance replicate the deterrent effect of political globalization on economic growth in emerging Asian economies.…”

“…[ 74 ] pointed out that overall globalization has a positive impact on economic growth, while the impact of fragmented globalization on economic growth shows that the social and political levels promote economic growth, while the economic level destroys economic growth in low-income countries. [ 75 ] use the Pooled Autoregressive Distribution Lag (ARDL) method to conclude that globalization has a positive effect on economic growth, which may not be sustained by rising interest rates and inflationary pressures, however, economic globalization can be used as a tool to stimulate investment, curbing corruption and subsequently sustaining economic growth in South Asian economies.…”

Critical Indicators on Macro Economics adoption in GDP: A systematic review

“…According to [51], the money supply and interest rate results demonstrate that, at 5%, the interest rate coefficient is negative and substantial, while the money supply coefficient is positive but not significant. The findings of [52] show that although globalization fosters economic growth, rising interest rates and inflationary pressures have the potential to counteract this benefit. The revised numbers also show how economic globalization may be used to increase investment, lower corruption, and eventually maintain economic development in South Asian nations, which are still in the nascent stages.…”

Globalization and food security in Sub-Saharan Africa

“…This review is pertinent to the broader study on the impact of globalization on food security in Sub-Saharan Africa, emphasizing the need for nuanced, regionspecific approaches to address food security challenges arising from trade policies. Liu et al (2022), conducted a study titled "Globalization and Economic Growth: A Sustainability Analysis for South Asian Countries, " exploring the impact of globalization on the economies of eight South Asian countries from 1996 to 2019. The study, using a pooled autoregressive-distributed lag approach, found that globalization positively affects economic development, with potential moderating factors like rising interest and inflation rates.…”