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Globalization And Its Impact On Developing Countries

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Globalization Isn’t Dead. But It’s Changing.

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By Pedro Antonio Martín Cervantes Pedro Antonio Martín Cervantes Scilit Preprints.org Google Scholar , Nuria Rueda López Nuria Rueda López Scilit Preprints.org Google Scholar and Salvador Cruz Rambaud Salvador Cruz Rambaud Scilit Preprints.org Google Scholar * *

Received: November 18, 2019 / Revised: February 27, 2020 / Accepted: February 29, 2020 / Published: March 3, 2020

Globalization And Politics: The Effects Of Globalization On Human Life Aspects

Background: The analysis of problems arising from globalization has become one of the most intensively studied topics at the beginning of this millennium, because they can have a decisive impact on current and future sustainable development. This paper analyzes the different patterns of globalization in four world areas pre-defined by the World Bank (namely, high-income, upper-middle-income, lower-middle-income and low-income countries). The main goal of this paper is to assess the impact of globalization on some indicators of economic development (in particular, per capita income and public spending on health) in 217 countries in the period 2000–2016. Methods: Our empirical approach is based on the implementation of a new econometric methodology: the so-called The Toda–Yamamoto procedure, which was used to analyze possible causal relationships between the variables involved. We use indicators of world development, provided by the World Bank, and the KOF Globalization Index, developed by the KOF Swiss Economic Institute. Results: The results show that there is a Granger causality between globalization and public spending on health, except in high-income countries. This can be interpreted both negatively and positively, confirming the dual character of globalization, as pointed out by Stiglitz.

At the end of the 1970s, Krugman [1] warned of the emergence of a new economic phenomenon, the so-called globalization, which, if appropriate measures are not taken, would sooner or later end up dominating the international economy. concert, as it finally happened. This process will soon go beyond the economic field and become a multidimensional phenomenon [2], attached to subjectivity and therefore difficult to analyze objectively. Usually globalization does not emphasize its “neutral” nature [3], but mainly its negative externalities [4], bypassing the positive externalities [5]. In addition, globalization plays a leading role as a reinforcing element that would contribute to the further increase of socio-economic inequalities between different countries and international areas.

This work, inspired by the New Economic Geography [1, 6, 7], responds to the need to objectively analyze globalization by considering it, according to the cumulative causality described by Myrdal [8], as a “concatenation of causal links”. In addition, it studies the evolution of globalization in four world interregional areas pre-defined by the World Bank in terms of per capita income and according to the Atlas methodology [9]. The KOF Globalization Index, provided by the Swiss Economic Institute KOF [10], and two variables (per capita income and per capita public spending on health) that are intrinsically related to globalization were used for causal analysis using Toda–Yamamoto [11] . ] procedure during the period 2000–2016, with data obtained from the World Bank (World Development Indicators) [12].

Based on this econometric test, conducted in four inter-regional areas around the world (high-income, upper-middle-income, lower-middle-income and low-income countries), three types of causal relationships were discovered. Indeed, given the externalities that are always associated with the globalization process, it can have both positive [13] and negative repercussions [4].

Pdf) An Analysis Of Impact Of Globalization In Developing Countries With Reference To Indian Economy

This paper is structured as follows. Section 2 presents a literature review of the main empirical approaches to globalization, considering their relationship with the New Economic Geography. Section 3 describes the data and methodology. This section also contextualizes, at the research level, the four global areas analyzed and the nature of the variables implemented in the empirical analysis based on the Toda–Yamamoto methodology. Chapter 4 presents the results obtained by applying this methodology. Finally, Section 5 includes a discussion, and Section 6 summarizes and concludes.

Globalization is a “complex and multiple” phenomenon [14] that has a lasting impact on world economies, which are increasingly integrated and open to the outside [15]. Consequently, the borders of economies are no longer their transnational borders, but the entire world.

In practice, for [16], globalization presupposes the creation of a transnational single market guided by the principles of free trade and enhanced by dynamic flows of information exchange, which provides the opportunity for organizations and individuals to conduct practically any type of economic business. transactions without having to be subject to national borders.

The globalization hypothesis could be explained by Krugman’s so-called New Economic Geography (hereinafter NEG) [3, 6, 7]. In fact, the classical macroeconomic model ignores some concepts such as the distances between production centers based in different countries and geographical areas, the level of transport costs or “space” as a key quantity for the analysis of internationalized economies. Krugman’s approach is completely different from the classical one because, regardless of the considered degree of openness of the economies, the traditional approach does not take into account the impact of economic globalization.

The Impact Of Globalization On Business

According to [17], NEG is a theory of the emergence of large agglomerations, based on the analysis of increasing returns to scale and transport costs through a fundamental study of the links between transnational companies and suppliers. In general, the reduction of transport costs would confirm the initial assumptions of globalization [1, 18], given that this reduction enabled the intensification of the ever-increasing return of the volume of production, encouraging the geographical concentration of the production of each good.

NEG [19], in addition to checking these initial hypotheses about globalization, establishes a very adequate analytical formulation of the so-called space economy at the level of countries and geographical areas [20]. The first sketch of the effect of internationalization on a set of macroeconomic variables was pointed out by [21].

The approach of this paper is a causal analysis of globalization in relation to two significant macroeconomic variables, i.e. per capita income and government expenditure on health. The choice of these variables is justified in the next two paragraphs.

The theoretical literature focused on the relationship between globalization and economic growth reports a contradictory debate on this relationship. In this way, it is expected that globalization will have a positive effect on growth through the effective improvement of productivity factors and technology [22]. On the contrary, according to [23], globalization does not stimulate economic growth due to its negative effects on job creation and increased risk. In addition, the authors [24] claim that globalization negatively affects economic growth in countries with weak institutions and political instability.

The Impact Of Globalisation On Economies And Business

On the other hand, there is a wide range of empirical literature on the above relationship (see Section 2.2). However, this study empirically examines the relationship between globalization and per capita income levels, rather than focusing on the relationship between globalization and the effect of economic growth.

Theoretically, globalization has also been analyzed as a phenomenon that can affect the size of government. In this way, there are two main hypotheses about the relationship between globalization and government expenditures. The first hypothesis, called the competition hypothesis, claims that governments are induced to reduce the size of the public sector by reducing expenditures and revenues (e.g. [25]). In contrast, another hypothesis, called the compensation hypothesis, states that globalization increases government expenditures in order to correct negative effects arising from the globalization process, such as inequality in income distribution (eg [26]).

There is a large body of empirical literature based on the potential relationship between globalization and the size of governments, the latter measured by government expenditure in general or social welfare expenditure in particular (see Section 2.2). However, there is a gap in the literature, particularly in the case of public health expenditure, one of the main components of social welfare expenditure. From this perspective, public expenditure on health care can be seen as an indicator of the size of the government and as an indicator of the country’s social development. As a consequence, this study uses

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