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

B. Rao and Krishna Chaitanya Vadlamannati

MPRA Paper from University Library of Munich, Germany

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.

Keywords: : Globalization; Economic growth; Solow model; Africa (search for similar items in EconPapers)
JEL-codes: O10 O11 (search for similar items in EconPapers)
Date: 2009-08-04
New Economics Papers: this item is included in nep-afr
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Citations: View citations in EconPapers (4)

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