Abstract
This article investigates whether the process of globalisation, through trade and financial liberalisation, benefits economic growth in emerging market economies in general and in South Africa in particular. The analysis of trade openness and liberalisation in emerging market economies reveals that trade volume has a relative small impact on GDP per capita, while trade liberalisation led to an approximate 50 per cent increase on GDP per capita. The analysis of the financial dimension showed that capital account openness is associated with a 34 per cent increase in real GDP per capita growth over the period, while financial liberalisation seems to have a dramatic impact of approximately 136 per cent. In South Africa approximately 98 per cent of the current growth performance in the country can be explained by the forces of globalisation.
Highlights
The process of globalisation has influenced most developing countries
The evidence presented above suggests that trade volume appears to increase growth by only 1 per cent, while trade liberalisation will lead to a 50 per cent increase in growth over the 11-year period
Economic theory creates strong presumptions that trade and financial liberalisation has favourable effects on economic growth. This paper investigates these phenomena by discussing the recent literature on the field, analysing it for the 22 emerging market economies in a classic growth regression and testing the robustness for the different regions
Summary
The process of globalisation has influenced most developing countries. While the opportunities and benefits of the opening of economies are emphasised by proponents and supporters of globalisation, disillusionment is growing among many policy-makers and economists about the costs and risks involved in the globalisation of national economies as well as the impact of it on future growth prospects. Emerging market economies averaged real economic growth rates of 4 per cent and 4.1 per cent respectively during the 1980s and 1990s, in comparison with average rates of 3.4 per cent and 3.3 per cent for developing countries and 3.2 per cent and 2.5 per cent on average for the world economy. Almost all the portfolio flows to developing countries are directed at emerging economies since their financial markets are more developed than those of the remaining developing countries 3. The aim of this article is firstly to discuss the recent literature on the fields, to establish to what extent globalisation, seen from the perspective of these two dimensions, contributes to economic growth and development in emerging market economies and to test the robustness of the results. The article concludes with policy implications and recommendations for the country
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: South African Journal of Economic and Management Sciences
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
