The impact of globalization and economic freedom on economic growth: the case of the Latin America and Caribbean countries
Date of Publication
2018 12:00 AM
Security Theme
Economic Stability
Keywords
Economic Stability, srhreports, economicstability, economic growth, economic freedom, globalization, Latin America, Caribbean, developing countries
Description
This study examines the impacts of globalization and economic freedom on the eco- nomic growth of a group of 24 developing countries from the Latin America and Caribbean over a time span ranging from 1995 to 2015. We have constructed two models, one with the globalization’s overall value and another with the political, social and economic dimensions of globalization. Our results point out to the fact that globalization has had a positive impact on the economic growth of these coun- tries in the long-run, as well their economic and social dimensions. Still, the politi- cal dimension of globalization did not show any statistically significant effect upon growth. In addition, we have found evidence of a negative impact resulting from economic freedom on the economic growth of these Latin American and Caribbean countries in the long-run. In the short-run, the results have indicated that electric power consumption (in all estimations) and social globalization (in only one esti- mation) were able to promote the economic growth of these countries. Finally, the negative and significant coefficient of the error correction mechanism in all estima- tions points out to the presence of cointegration/long-memory relationships between the variables. This study aims to contribute to the enrichment of the globaliza- tion-growth and economic freedom-growth literature in the way that it attempts to overcome some of the flaws identified in previous studies. In our analysis we have identified and corrected the presence of outliers, which are quite often neglected, and if not controlled can actually compromise the macro-economic analysis of this region. The results from this study should primarily contribute to guide policymak- ers in their decisions, thus helping them to draw growth-promoting policies in their respective countries."
The impact of globalization and economic freedom on economic growth: the case of the Latin America and Caribbean countries
This study examines the impacts of globalization and economic freedom on the eco- nomic growth of a group of 24 developing countries from the Latin America and Caribbean over a time span ranging from 1995 to 2015. We have constructed two models, one with the globalization’s overall value and another with the political, social and economic dimensions of globalization. Our results point out to the fact that globalization has had a positive impact on the economic growth of these coun- tries in the long-run, as well their economic and social dimensions. Still, the politi- cal dimension of globalization did not show any statistically significant effect upon growth. In addition, we have found evidence of a negative impact resulting from economic freedom on the economic growth of these Latin American and Caribbean countries in the long-run. In the short-run, the results have indicated that electric power consumption (in all estimations) and social globalization (in only one esti- mation) were able to promote the economic growth of these countries. Finally, the negative and significant coefficient of the error correction mechanism in all estima- tions points out to the presence of cointegration/long-memory relationships between the variables. This study aims to contribute to the enrichment of the globaliza- tion-growth and economic freedom-growth literature in the way that it attempts to overcome some of the flaws identified in previous studies. In our analysis we have identified and corrected the presence of outliers, which are quite often neglected, and if not controlled can actually compromise the macro-economic analysis of this region. The results from this study should primarily contribute to guide policymak- ers in their decisions, thus helping them to draw growth-promoting policies in their respective countries."
