The Impact of Globalization on Economic Growth Among Developing Countries
The title of the article is the Impact of Globalization on Economic Growth Among Developing Countries. This article was co-authored by Aisahath Reeshan who holds a bachelor of arts in international management from Anglia Ruskin University the UK and Zuhair Hassan, a senior lecturer in the school of accounting and business management. The research article was published in the International Journal of Accounting and Business management volume 5 No.1 in April 2017.
Conceptualization
Globalization has had a generally positive impact on the growth of the developing countries steadily since 1970 but fell drastically since 2013. There are several aspects of globalization that play an important role in the general economy of the developing countries. Social globalization, economic globalization, and political globalization all present a conglomeration of factors that affect the Gross Domestic Product of developing countries. The use of the data from the 2015 statistics led to the development of the following objectives to close up the gap created by the previous studies on globalization and the economy.
- To investigate the overall effect of globalization on the economy
- To examine the impact of political globalization on the economy of the developing countries.
- To examine the effect of economic globalization on economic growth.
- To investigate the influence of social globalization on economic growth.
- The social theories.
There are three social theories that play a vital role in the economic growth of nations as attributed to globalization. The theories include in the modernization theory, the world systems theory and the Theory of dependence (Reyes, 151). The world systems have overemphasized on the nation state-centrism which has promoted the development of nations while neglecting the vital role of global equality, however this theory provides foundation on further research on how to subdue the capitalism in the world by laying emphasis on social revolution to overcome the social class differences in most of the countries (Reyes, 154).
Modernization theory, on the other hand, provides a vague definition of social status by ignoring important intervening variables which include the value system and ideology (Reyes 156). The consequences of this failure of modernization theory are evident in the heterogeneous set of value systems that are dominant in the developing countries. Thirdly the theory of dependency provides an avenue that stagnates the progress of the economic growth of African countries by emphasizing foreign aids from international corporations and countries. These factors go along way into further influencing the political, cultural and economic integration of these countries (Reyes 154).
Literature Review
Globalization is defined as the economic consolidation of many national economies into one global economy by the free movement of capital, free trade and easy migration (Daly 34). Political globalization is on the other hand defined as the expansion of the global political systems with inter-regional transactions which are not limited to trade. (Modelski, Devezas and Thompson 31). Nye (314) defined economic globalization as the long-distance exchange and flow of goods, capital, and services as well as the information related to market exchange. Lastly, social globalization is the movement or spread of ideas, images and people globally.
A study done by Kilic to determine the effect of political, economic and social globalization on the economy of developing countries in 2011 shows that the economic growth of the countries was positively impacted by both political and economic globalization. On the other hand, social globalization had a negative impact on the economic development of the 74 countries (Kilic 74). Another 2014 study by Chang, Ying, and Lee that determined the influence of globalization on the economic development of Asian countries in 2008 shows. The findings clearly showed that economic globalization had a positive impact on economic development whereas social globalization impacted negatively on the economy. Political globalization, however, had zero effect on the growth of the economy. The analysis based on the two research findings that used the Gross Domestic Product and Foreign Direct Investments as the basis of measurement of the economic growth provided a firm foundation for the development of this research.
Current Study
The current study is determined the general impact of economic, social and political globalization on the growth of developing countries. The research was conducted on 86 countries with the dependent variables being the Gross Domestic Product and Foreign Direct Investments.
The hypothesis for the study was derived from the previous research where the economic globalization has a positive impact on the economic growth whereas political and social globalization exhibit negative and less significant impact on the economic development. The research thus involved 86 countries from the developing world. The census sampling technique was used for the research because it was more reliable and compared to probability or non-probability sampling methods. The source of data was secondary since the KOF Global index and World Bank were the main sources of the research for this study. This data was availed through the internet and various reliable websites which is a cheaper means of data generation.
Research Methods
The data was collected by use of a secondary means which is the internet and websites from the KOF Globalization index and worldbank.org. The data involved 86 countries. By using the social, political and economic global indices from KFC and FDC data from the world bank, an analysis was done. Our team of seven researchers, however, rejected 53 countries out of the 86 due to missing figures from the respective sources. The quantitative descriptive statistical means and the standard deviation was used in the data analysis due to its reliability compared to the other methods. The impact of the relationship between a dependent variable with the multiple independent variables was analyzed using the multiple regression analysis (Saunders 139). The data was finally analyzed by use of the SPSS software to draw the results and conclusions of the general study.
Conclusion
The analysis of the results from the statistics justified the hypothesis of the study. Results presented in the charts and tables showing the interrelationship between the variables showed that the overall globalization has a negative influence on both the GDP and FDI and therefore overall globalization negatively impacts the economic growth. On the other hand, political globalization negatively impacts the FDI but positively influences the GDP. Conclusively political globalization has a negative impact on the economic growth of the countries. Social globalization too had a negative impact on the growth of the economy of the selected countries because it had a non-significant impact on both the GDP and FDI of the countries. Lastly, economic globalization had a positive influence on FDI but a negative impact on the GDP as a result of this, economic globalization contributes a partial growth in the economy of such countries.
Limitations
The research seemed to be limited in the scope of coverage which only involved the developing countries. More diverse research with a wider scope would have been more appropriate. Consequently, other variables should have been that have a relative impact on the GDP. Such variables include national income, private investment, employment among others. This will ensure more accurate research for a longer duration of relevance and applicability.
Work Cited
Aisahath R and Zubair H. Impact of Globalization On Economic Growth Among Developing Countries. International Journal of Accounting and Business Management. Vol 5. 2017.
Daly, H. "Globalization versus internationalization implications." Ecological economics 31 (1999): 31-37.
Modelski, G., W. R. Thompson, and T. Devezas. "Globalization as Evolutionary Process: Modeling Global Change. New York: Routledge." (2008).
Keohane, Robert O., and Joseph S. Nye Jr. "Globalization: What's new? What's not? (And so what?)." Foreign policy (2000): 104-119.
Reyes, Giovanni E. "Four main theories of development: modernization, dependency, world-systems, and globalization." Nómadas. Revista Crítica de Ciencias Sociales y Jurídicas 4.2 (2001): 109-124.
