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Regional Business Cycle Synchronization in Emerging and Developing Countries: Regional or Global Integration? Trade or Financial Integration?

Author

Listed:
  • Chi Gong

    (Sichuan University)

  • Soyoung Kim

    (Seoul National University)

Abstract

This paper examines the effects of regional versus global integration and trade versus financial integration on regional business cycle synchronization in three regions containing developing and emerging countries (East Asia, Latin America, and Central and Eastern Europe). The main empirical results are as follows: (1) strong and similar common global linkages, especially financial linkages, have significant positive effects on the synchronization of regional business cycles; (2) after controlling global linkages, regional trade integration has a positive effect on regional business cycle synchronization, whereas regional financial integration has a negative effect; and (3) although the direction for the effect of each type of integration is similar across regions, the relative importance of each in explaining regional business cycle synchronization is different. Specifically, while global financial linkages play the most important role in East Asia and Latin America, regional trade integration is most important in Central and Eastern Europe.

Suggested Citation

  • Chi Gong & Soyoung Kim, 2017. "Regional Business Cycle Synchronization in Emerging and Developing Countries: Regional or Global Integration? Trade or Financial Integration?," GRU Working Paper Series GRU_2017_014, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    • Handle: RePEc:cth:wpaper:gru_2017_014
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    Cited by:

    1. Anping Chen & Nicolaas Groenewold, 2022. "Regional Resilience in China: The Response of the Provinces to the Growth Slowdown," The Review of Regional Studies, Southern Regional Science Association, vol. 52(1), pages 74-103.
    2. Hanif, Waqas & El Khoury, Rim & Hadhri, Sinda, 2025. "Is connectedness between commodity volatility indices and G-7 stock market returns the same across return quantiles?," Journal of Multinational Financial Management, Elsevier, vol. 79(C).
    3. Louis-Joel Basneouinde Diendere & Achille Augustin Diendere & Jude Comlanvi Eggoh, 2025. "Intra-Industry trade and its effects on business cycle synchronization in ECOWAS: An empirical analysis," Economics Bulletin, AccessEcon, vol. 45(2), pages 723-740.
    4. Michał Brzoza‐Brzezina & Jacek Kotłowski & Grzegorz Wesołowski, 2022. "International information flows, sentiments, and cross‐country business cycle fluctuations," Review of International Economics, Wiley Blackwell, vol. 30(4), pages 1110-1147, September.
    5. Faryna, Oleksandr & Simola, Heli, 2021. "The transmission of international shocks to CIS economies: A global VAR approach," Economic Systems, Elsevier, vol. 45(2).
    6. Gießler Stefan & Heinisch Katja & Holtemöller Oliver, 2021. "(Since When) Are East and West German Business Cycles Synchronised?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 241(1), pages 1-28, February.
    7. Shengnan Lv & Zeshui Xu & Xuecheng Fan & Yong Qin & Marinko Skare, 2023. "The mean reversion/persistence of financial cycles: Empirical evidence for 24 countries worldwide," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 18(1), pages 11-47, March.
    8. Saini, Seema & Ahmad, Wasim & Bekiros, Stelios, 2021. "Understanding the credit cycle and business cycle dynamics in India," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 988-1006.
    9. Baher Ahmed Elgahry, 2020. "Regional and Interregional Business Cycle Comovement in Europe, Asia, and North America," Economics Bulletin, AccessEcon, vol. 40(4), pages 3088-3103.
    10. Song Yue & Sha Nan, 2018. "Can underdeveloped areas catch up with developed areas in China? Evidence from nighttime light intensity data from outer space," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 8(6), pages 1-5.
    11. Dia, Enzo & VanHoose, David, 2025. "Banking and monetary policy in a monetary union," International Review of Economics & Finance, Elsevier, vol. 99(C).
    12. Shinya Fukui, 2020. "Business Cycle Spatial Synchronization: Measuring a Synchronization Parameter," Discussion Papers 2009, Graduate School of Economics, Kobe University.
    13. Augusto Cerqua & Roberta Di Stefano & Guido Pellegrini, 2023. "What kind of region reaps the benefits of a currency union?," Journal of Regional Science, Wiley Blackwell, vol. 63(3), pages 552-582, June.
    14. Mirco Balatti & M. Ayhan Kose & Kate McKinnon & Edoardo Palombo & Naotaka Sugawara & Guillermo Verduzco-Bustos & Dana Vorisek, 2025. "From Tailwinds to Headwinds: Emerging and Developing Economies in the Twenty-First Century," CAMA Working Papers 2025-44, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    15. Tan, Sook-Rei & Yeap, Xiu Wei & Li, Changtai & Wang, Wei-Siang & Chia, Wai-Mun, 2024. "Determinants of international Economic Policy Uncertainty transmission: The role of economic openness," International Review of Economics & Finance, Elsevier, vol. 95(C).
    16. Sharada Nia Davidson, 2022. "Regional Integration and Decoupling in the Asia Pacific: A Bayesian Panel VAR Approach," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 70(4), pages 773-807, December.
    17. Hwang, Seolwoong & Kim, Soyoung, 2022. "Real business cycles in emerging countries: Are Asian business cycles different from Latin American business cycles?," Journal of International Money and Finance, Elsevier, vol. 129(C).
    18. Simola, Heli, 2019. "Effects of external shocks on Russian economy," BOFIT Policy Briefs 4/2019, Bank of Finland Institute for Emerging Economies (BOFIT).
    19. Michał Brzoza-Brzezina & Jacek Kotłowski, 2021. "International confidence spillovers and business cycles in small open economies," Empirical Economics, Springer, vol. 61(2), pages 773-798, August.

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