Do economic globalization and the level of education impede poverty levels? A non-linear ARDL approach

Shreya Pal ()
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Shreya Pal: Indian Institute of Technology Kharagpur

The Journal of Economic Inequality, 2024, vol. 22, issue 3, No 5, 667 pages

Abstract: Abstract This study empirically examines whether economic globalization reduces (enhances) the level of poverty in the top (bottom) globalized region by controlling economic growth, urbanization, government expenditure, and public expenditure on education. This issue has taken Europe and Central Asia (ECA) as the top (16) and South Asia (SA) as the bottom (7) economic globalized developing region for the empirical analysis for the period of 1991-2020. Two empirical models, non-linear ARDL and PMG-ARDL, estimate the impact of globalization (trade and financial openness) and education on poverty. This study also segregates economic globalization into de jure and de facto to critically analyze the impact on poverty reduction. The long-run results suggest that economic globalization has a negative (positive) effect on poverty in the top (bottom) globalized region. Apart from globalization, primary education is insufficient for reducing poverty in the ECA region, while primary education is enough to reduce poverty in the SA region. After replacing economic globalization with trade and financial openness, the results reveal that more trade openness is difficult for reducing poverty in top globalized developing countries. On the contrary, financial openness reduces (enhances) poverty in the top (bottom) globalized region. Additionally, the impact of de jure and de facto economic globalization are similar throughout the regions. The effects of control variables are mixed in nature. From a policy perspective, the government of these two regions should use education as a weapon to lower poverty vulnerability by improving its quality and giving extensive focus on trade and financial openness to find out the leakage of the financial flows.

Keywords: Globalization; Trade openness; Financial openness; Poverty; Education; NARDL; F62; F40; F36; I32; I20; C33 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10888-023-09608-3

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