Growth effects of a comprehensive measure of globalization with country-specific time series data
Abstract:Many studies have estimated the growth effects of globalization where globalization was measured with a few economic variables, ignoring its social and political dimensions. Recently, Dreher (2006) has developed a comprehensive measure of globalization with several variables from the economic, political and social sectors. He showed, with the panel data methods, that globalization has positive growth effect implying that countries with higher globalization grow faster. We argue that 5-year average growth rates, used in many panel data studies, are inadequate proxies for the unobservable Steady State Growth Rate (SSGR). Using the Dreher indices, we extend the Solow (1956) model to derive country-specific estimates of SSGRs for Singapore, Malaysia, Thailand, India and the Philippines. Our results show that countries with higher levels of globalization have higher SSGRs but the growth effects on SSGRs are smaller than in many studies.
Document Type: Research Article
Affiliations: 1: School of Economics and Finance, University of Western Sydney, Sydney, Australia 2: Department of Finance and Accounting, University of Santiago de Compostela, Santiago, Spain 3: Department of Applied Economics, University of Santiago de Compostela, Santiago, Spain
Publication date: February 1, 2011