Abstract
The paper investigates the impact of globalization (overall, economic, social, and political) on economic growth of South Asian countries over the period from 1971 to 2014 employing cross-sectional dependence test, Cross sectionally Augmented Dickey–Fuller (CADF) unit root test (Pesaran in J Appl Econ 22(2):265–312 https://doi.org/10.1002/jae.951, 2007), and Pooled Mean Group (PMG) panel cointegration model (Pesaran et al. in J Am Stat Assoc 94(446):621–634, 1999). Results report that overall globalization, economic globalization, and political globalization accelerate economic growth in the long-run; however, the dimensions of globalization have no significant effect in the short-run. Focusing on the individual country regressions, we find the amalgam results, as the characteristics, elasticity, and strength of political, social, and economic institutions are different in the selected countries. The policy implication is that the governments of South Asian countries should realize the importance of globalization as a powerful influencing force and should adopt the new circumstances of globalization quickly and try to find coherent policies to be connected with an evolving world.
Highlights
Economic growth has long been considered as a central macroeconomic goal of economic policy, and a substantial body of research has been performed over the years to explain how this goal is successfully accomplished
Focusing on the individual country regressions, we find that the social and political globalization significantly prompts economic growth in India and Nepal in the short-run, while they have a negative impact on Pakistan economy
The CIPS statistic of Cross sectionally Augmented Dickey–Fuller (CADF) unit root test results reveal that the individual series are either I(0) or I(1) and most importantly, none of the variables are integrated of order two
Summary
Economic growth has long been considered as a central macroeconomic goal of economic policy, and a substantial body of research has been performed over the years to explain how this goal is successfully accomplished. The performances of the South Asian economy during the 21st century have been quite impressive as the average GDP growth has been increased to 6.82% per annum, while the world average is decreased. 25): “Globalization, a dominant force in the 20th century’s last decade, is shaping a new era of interaction among nations, economies and people. It is increasing the contacts between people across national boundaries in economy, in technology, in culture and in governance.” Rothenberg (2003) states, “Globalization is the acceleration and intensification of interaction and integration among the people, companies, and governments of different nations” Globalization turns out to be a multidimensional concept as it covers a lot of areas, such as economic, political, and social areas
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