Global Evidence on the Impact of Globalization, Governance, and Financial Development on Economic Growth

Ijaz Uddin (ijazuddin01@gmail.com) and Muhammad Azam Khan (drazam75@yahoo.com)
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Ijaz Uddin: Abdul Wali Khan University Mardan
Muhammad Azam Khan: Abdul Wali Khan University Mardan

Journal of the Knowledge Economy, 2024, vol. 15, issue 3, No 165, 14546-14577

Abstract: Abstract We examined the impact of globalization, governance, and financial development on per capita income representing economic growth for 156 countries across the globe during 2002–2018. The analysis is categorized into full samples, and sub samples (i.e., low, lower, upper middle-, & high-income countries). The empirical methodology consists of 1st and 2nd generation panel unit root tests, panel co-integration test, Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and panel Dumitrescu Hurlin Granger causality test. The FMOLS and DOLS estimate indicated that financial development and human capital had a positive effect on economic growth for lower-income, lower-middle-income, upper-middle-income, high-income countries, and full sample. Governance factor namely control of corruption has a positive effect on economic growth in all income groups’ countries except lower-middle-income and full sample. The impact of governance factors namely political stability & absence of violence had a positive effect on economic growth in all income groups’ countries and full sample except upper-middle-income countries. Likewise, globalization had a positive effect on economic growth for all income groups’ countries, except full sample. These findings suggest that the developed financial sector, good governance, and globalization need to be strengthened to boost economic growth.

Keywords: Globalization; Governance; Financial development; Economic growth (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13132-023-01656-4

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