Regionalization vs. Globalization

Abstract

Both global and regional economic linkages have strengthened substantially over the past quarter century. We employ a dynamic factor model to analyze the implications of these linkages for the evolution of global and regional business cycles. Our model allows us to assess the roles played by the global, regional, and country-specific factors in explaining business cycles in a large sample of countries and regions over the period 1960-2010. We find that, since the mid-1980s, the importance of regional factors has increased markedly in explaining business cycles especially in regions that experienced a sharp growth in intra-regional trade and financial flows. By contrast, the relative importance of the global factor has declined over the same period. In short, the recent era of globalization has witnessed the emergence of regional business cycles.

Is Asia Decoupling from the United States (Again)?

“…Those suggesting Asian decoupling claim that the region is becoming more interdependent, rather than more integrated with the world as a whole. Using a dynamic factor model, Hirata, et al (2013), find evidence of an increase in the explanatory power of regional factors in explaining output, but a global factor's influence is found to have actually declined over the same period. They argue that recent globalization has facilitated regional business cycle synchronization rather than global synchronization.…”

Global Economic Divergence and Portfolio Capital Flows to Emerging Markets

“…First, it allows to distinguish between global and regional factors in a parsimonious way. Identification of factors is carried out in a similar manner to Hirata, Kose, and Otrok () and Kose, Otrok, and Whiteman (), where global factors load on all relevant variables across the world, whereas regional factors load only on the regional variables. However, the dynamic factor models commonly employed in the literature rest on the assumption that the identified factors are orthogonal to each other.…”

Determinants of Jordanian Economic Growth: Time Series Approach

“…Some researchers explained that the economic growth is reinforcing by the human capital and the positive externalities and spill over effects of a knowledge-based economy that will lead to economic development as well as the economic growth is depends on policy measures (Aghion, Ljungqvist, Howitt, Howitt, Brant-Collett, and García-Peñalosa, 1998; Romer, 1986). Moreover, the economic growth is depending on some basic conditions like institutional development, financial market development, macroeconomic reform (Hirata, Kose and Otrok, 2013).…”