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Growth Effects of Globalization in the Low Income African Countries: A Systems GMM Panel Data Approach

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  • Rao, B. Bhaskara
  • Vadlamannati, Krishna Chaitanya

Abstract

The relationship between globalization and economic growth in the developing countries remains controversial. Liberals argue that globalization will lead to higher economic growth and prosperity. Skeptics contend the opposite, where globalization processes might lead to increased inequality and lower economic growth. Previous studies have examined this issue with single indicators such as trade openness or foreign direct investment (FDI) or aid etc. In this study we make use of a comprehensive measure of globalization developed by Dreher (2006), which measures globalization along three important dimensions viz., economic, political, and social fields to assess the pros and cons of globalization. Our panel data results with a systems based GMM (SGMM) method show a small but significant positive association between globalization and economic growth for a panel of 21 low income African countries for the period 1970 – 2005.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16595.

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Date of creation: 04 Aug 2009
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Handle: RePEc:pra:mprapa:16595

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Keywords: : Globalization; Economic growth; Solow model; Africa;

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  1. R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
  2. B. Bhaskara Rao & Artur Tamazian & Krishna Chaitanya Vadlamannati, 2011. "Growth effects of a comprehensive measure of globalization with country-specific time series data," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 43(5), pages 551-568.
  3. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  4. Axel Dreher, 2005. "Does Globalization Affect Growth? Evidence from a new Index of Globalization," TWI Research Paper Series 6, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
  5. Jeffrey Sachs & Andrew Warner, 1995. "Economic Reform and the Progress of Global Integration," Harvard Institute of Economic Research Working Papers 1733, Harvard - Institute of Economic Research.
  6. Durlauf, Steven N. & Johnson, Paul A. & Temple, Jonathan R.W., 2005. "Growth Econometrics," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 8, pages 555-677 Elsevier.
  7. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  8. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 108(3), pages 653-79, August.
  9. David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(493), pages F22-F49, 02.
  10. Pritchett, Lant, 1996. "Measuring outward orientation in LDCs: Can it be done?," Journal of Development Economics, Elsevier, Elsevier, vol. 49(2), pages 307-335, May.
  11. Greenaway, David & Morgan, Wyn & Wright, Peter W, 1998. "Trade Reform, Adjustment and Growth: What Does the Evidence Tell Us?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 108(450), pages 1547-61, September.
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Cited by:
  1. Bory Seng, 2010. "The Driving Forces Underlying the Growth of Total Factor Productivity in Cambodia," TEMEP Discussion Papers 201068, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Oct 2010.

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