New Evidence of Non-Linear Effects of Economic Globalization on Economic Welfare

Aniseh Amini (), Saman Ghaderi () and Khaled Ahmadzadeh ()
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Aniseh Amini: Bachelor's degree M.Sc. Student in Economics, University of Kurdistan
Saman Ghaderi: Assistant Professor of Economics, University of Kurdistan
Khaled Ahmadzadeh: Associate Professor of Economics, University of Kurdistan

Quarterly Journal of Applied Theories of Economics, 2024, vol. 11, issue 2, 199-248

Abstract: Examining the state of countries' welfare requires indicators that adequately show the well-being of people's lives. One of the indicators that can affect this issue is the economic welfare index provided by the Sustainable Society Foundation. In this research, the impact of economic globalization on the economic well-being of developed and developing countries from 2000 to 2020 was investigated using the panel smooth transition regression (PSTR) method. The results show the existence of a non-linear relationship between the research variables. Also, for developed and developing countries, two transfer functions and two thresholds representing a three-regime model were chosen as the optimal model. For developed countries, the speed of adjustment, i.e., the transition from the linear regime to the intermediate regime, is carried out much faster than the transition from the intermediate regime to the third limit regime. Also, for developing countries, the regime transition is done at a moderate speed in all three regimes, but the transition from the first regime to the middle regime is faster than the transition from the middle regime to the third regime. Economic globalization in developed countries has a negative effect on economic well-being in the first limit regime and a positive effect in the second and third limit regimes. While in developing countries, economic globalization has a positive effect on economic well-being in all three regimes. Considering the different effects of economic globalization on the welfare of countries, economic policies should be designed to take advantage of the positive opportunities of globalization in developed and developing countries and accelerate the transition to more favorable regimes. Especially in developing countries, strengthening infrastructure and upgrading economic capacities can help to benefit more from the benefits of globalization

Keywords: Economic well-being; Economic Globalization; Smooth Transition Panel Regression (PSTR). (search for similar items in EconPapers)
JEL-codes: D63 F64 Q56 (search for similar items in EconPapers)
Date: 2024
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