Does globalization affect growth? Evidence from a new index of globalization

TLDR

The study develops a comprehensive globalization index comprising economic, social, and political integration dimensions and examines its impact on economic growth. The authors employ panel data from 123 countries (1970–2000) to empirically test how the overall globalization index and its sub‑indexes influence economic growth. Results show that globalization promotes growth, with economic flows and restrictions in developed countries having the strongest positive effect, information flows also contributing, while political integration has no impact. Acknowledgements: the author thanks numerous colleagues and institutions for their support.

Abstract

Abstract The study develops an index of globalization covering its three main dimensions: economic integration, social integration, and political integration. Using panel data for 123 countries in 1970–2000 it is analysed empirically whether the overall index of globalization as well as sub-indexes constructed to measure the single dimensions affect economic growth. As the results show, globalization indeed promotes growth. The dimensions most robustly related with growth refer to actual economic flows and restrictions in developed countries. Although less robustly, information flows also promote growth whereas political integration has no effect. Acknowledgements The author thanks Bernhard Boockmann, Christos Kotsogiannis, Quan Li, Verena Liessem, Fulvio Mulatero, Torsten Saadma, Lars-H. R. Siemers, seminar participants at the ENTER Jamboree Meeting 2003, the Passau Workshop ‘Internationale Wirtschaftsbeziehungen’ 2003, the 6th Annual Conference on Global Economic Analysis (2003), the European Economic Association (2003), the Verein fuer Socialpolitik (2003), the Malmö workshop on Globalization and Health (2005), the universities of Goettingen, de las Americas and Exeter, and a referee of this journal for valuable comments.