Globalization and economic growth of Eurozone economies

Abstract

Globalization is a process of world economic integration which leads to the global economy without borders. The paper estimates the impact of globalization on economic growth in the case of European Monetary Union countries (EMU). Authors used three components of globalization – economic, social, and political globalization. Pooled Mean Group estimator (PMG) was used to estimate the long-run and short-run relationship between globalization and economic growth. The results showed that in the short-run, economic and social globalization has a positive impact on economic growth, while political globalization has a negative effect on the economic growth of EMU countries. In the long-run, economic globalization has a statistically significant positive impact on the economic growth of EMU countries, while social and political globalization has a negative effect on the economic growth of EMU countries. Authors recommend, for each country, case by case approach in accepting the globalization process. The approach depends on the country’s development stage, social, and political background. Thus, the approach for developing and least developed countries could be an evolutionary way, while for the developed ones a faster way of acceptances of globalization, for developed countries.