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Does globalization foster economic growth?

Author

Listed:
  • Tadashi Morita

    (Faculty of Economics, Osaka Gakuin University)

  • Hajime Takatsuka

    (Graduate School of Management, Kagawa University)

  • Kazuhiro Yamamoto

    (Graduate School of Economics, Osaka University)

Abstract

This article focuses on two distinct faces of globalization: the decrease in trade costs of goods and the decline of affiliation costs of joint ventures by foreign firms with local firms. The decrease of affiliation costs drives relocation of firms from the North to the South. When the market size of the North is relatively small (resp. large), the growth rate monotonously decreases (resp. first decreases and rises after this) with a decline of affiliation costs. In the case of lowering trade costs, the firm share in the North evolves as a U-shaped curve (resp. monotonously increases) when the market size of the North is relatively small (resp. large). Growth rates are raised with agglomeration in the North. Finally, we present some welfare implications.

Suggested Citation

  • Tadashi Morita & Hajime Takatsuka & Kazuhiro Yamamoto, 2012. "Does globalization foster economic growth?," Discussion Papers in Economics and Business 12-11, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1211
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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1211.pdf
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    2. Hajime Takatsuka & Dao‐Zhi Zeng, 2022. "Mobile capital, optimal tariff, and tariff war," Review of International Economics, Wiley Blackwell, vol. 30(1), pages 166-204, February.
    3. Oluwaseyi Musibau, Hammed & Olawale Shittu, Waliu & Yanotti, Maria, 2022. "Natural resources endowment: What more does West Africa need in order to grow?," Resources Policy, Elsevier, vol. 77(C).
    4. Dapeng Cai & Yukio Karasawa‐Ohtashiro, 2021. "Why Do Mandated International Joint Ventures Still Exist?," Contemporary Economic Policy, Western Economic Association International, vol. 39(1), pages 236-247, January.
    5. Quan Dong & Juan Carlos Bárcena-Ruiz & María Begoña Garzón, 2015. "Restrictions on Foreign Investments and the Relocation of Firms," Australian Economic Papers, Wiley Blackwell, vol. 54(4), pages 250-265, December.
    6. Olimpia Neagu & Stela Dima, 2017. "Impact of Globalisation On Economic Growth in Romania: An Empirical Analysis of Its Economic, Social and Political Dimensions," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 27(1), pages 29-40, April.

    More about this item

    Keywords

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    JEL classification:

    • F0 - International Economics - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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