A cross-country study of the direct and inverse relationship between economic globalization and growth
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Author(s)Oleksiy KhoroshunLink to ORCID Index: https://orcid.org/0000-0001-7571-0419
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Hanna OlasiukLink to ORCID Index: https://orcid.org/0000-0003-3257-225X
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Vira RokochaLink to ORCID Index: https://orcid.org/0000-0002-0467-856X
,
Sanjeev Kumar
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DOIhttp://dx.doi.org/10.21511/imfi.20(1).2023.22
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Article InfoVolume 20 2023, Issue #1, pp. 250-264
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- 529 Views
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198 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This study aims to explore the cross-country relationship between economic globalization and growth. It assesses the implications of globalization for the world economy and groups of countries with different income levels. The study employed panel data from the World Bank, the Fraser Institute, and the Swiss Federal Institute of Technology in Zürich for 122 countries from 1970 to 2018. Two-stage fixed effect model was used to assess the impact of globalization on growth. The reverse causality was estimated using the method of instrumental variables. The results showed that the world economy benefited from globalization. In turn, greater openness has reinforced economic growth. The study confirms that globalization benefits are distributed unequally. A significant positive impact of globalization on economic growth is confirmed for high and lower-middle-income economies with coefficients of 0.02 and 0.01, respectively. Economic growth of high-income countries is determined by financial globalization, while lower-middle-income countries rely on trade and financial openness. Negative implications of economic globalization took place in upper-middle-income countries with a coefficient of -0.02. In these countries, correlation between trade globalization and growth is -0.13. The effect of economic growth on globalization is found to be significantly positive for high-income (11.08) and upper-middle-income countries (9.62) and statistically insignificant for lower-middle-income economies.
- Keywords
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JEL Classification (Paper profile tab)F43, F63, O47, O57
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References38
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Tables8
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Figures3
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- Figure 1. Direct and reverse relationship between growth and economic globalization
- Figure 2. GDP per capita in the world and the KOF index
- Figure 3. Scatter diagram of GDP per capita and globalization indices
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- Table 1. Description of variables
- Table 2. Mean 5-year values of GDP growth and KOFE across income groups
- Table 3. Mean values of GDP growth with respect to economic globalization
- Table 4. GDP and globalization: a direct link (1970–2018)
- Table 5. GDP and globalization: feedback (1970–2018)
- Table A1. Summary of variables in empirical studies on globalization-growth relationships
- Table B1. GDP per capita, growth and KOF indices of globalization by income groups
- Table C1. Correlation coefficients between real GDP growth and KOF indices of globalization
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IFRS and stock exchange development in sub-Saharan Africa: a logistic model
Ochuko B. Emudainohwo
doi: http://dx.doi.org/10.21511/imfi.17(3).2020.30
Investment Management and Financial Innovations Volume 17, 2020 Issue #3 pp. 397-407 Views: 745 Downloads: 553 TO CITE АНОТАЦІЯThis study examines the impact of International Financial Reporting Standards (IFRS) on the stock exchange development (SED) in sub-Saharan Africa (SSA). The essence is to offer suggestions on how the adoption of IFRS in the SSA region can benefit their SED. The study employed logistic regression analysis of data for 40 SSA countries for the period 2010–2018. Data were extracted from the World Bank’s World Development Index (WDI) database, sampled countries’ stock exchange websites, and the IFRS website. The dependent variable (SED) took two values: 1 – if a stock exchange is established in the observed country’s period, otherwise – 0. The model result was well fitted: p < 0.0001, correctly classified an overall SED accuracy up to 84.84% and excellent area predictive power at a receiver operator characteristic of 0.9347. The study observed that IFRS had high degree of co-movement with SED, and changes in IFRS had a strong positive impact on SED. Besides, changes in market size, ICT infrastructure, and public sector management and institution (PSMI) had a positive and significant impact on SED. The odd ratio of SED compared to non-SED is greatest with IFRS (40.67 times), and for the other variables, the ratios are: market size (4.02), ICT infrastructure (1.26), and PSMI (2.73), respectively. On a greater extent, SSA countries should allow the use of IFRS for financial reporting to expedite SED.
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An analysis of Granger causality between sovereign credit rating and economic growth in Sub-Saharan Africa
Misheck Mutize ,
Virimai V. Mugobo
doi: http://dx.doi.org/10.21511/imfi.17(4).2020.08
Investment Management and Financial Innovations Volume 17, 2020 Issue #4 pp. 85-93 Views: 706 Downloads: 149 TO CITE АНОТАЦІЯInterest in the relationship between credit rating and economic growth is growing as emerging economies increasingly integrate into international financial markets. Without credit ratings, developing economies would not have been able to successfully issue their sovereign bonds to support economic growth. Therefore, this paper examines a causality relationship between Standard & Poor’s long-term foreign currency sovereign credit ratings and economic growth in 19 Sub-Saharan countries over the period from 2003 to 2018. The results of the Granger causality tests show a unidirectional causality from sovereign credit ratings to economic growth, not vice versa. This implies that economic growth is not significant in determining sovereign credit ratings. It can thus be concluded from these findings that sovereign credit ratings are proactive actions by rating agencies that are relevant in determining future economic growth. Thus, investors benefit from utilizing credit ratings to prevent inherent information asymmetry in fundamental economic factors. Therefore, it is important for policy makers to pay attention to sovereign credit ratings when formulating macroeconomic policies.
