Abstract
Finance-driven globalization has produced winners and losers in the developing world. Over the past 30 years, many developing countries have experienced spurts of economic growth followed by collapses. In the process, some have fallen further behind the advanced economies, while only a few have enjoyed sustained economic growth. The main purpose of this paper is to provide an assessment of the empirical evidence on the effects of financial globalization for developing economies of the Commonwealth of Independent States (former Soviet Republics). This group of countries was chosen for reasons of geographic proximity and similarities in economic structure; we tried to answer the question: Did the drive by the financial sector globalization empower the growth for the sample countries? On the basis of Blundell and Bond (Journal of Econometrics 87:115–143, 1998), a dynamic panel data model is employed. The econometric methodology is the system GMM two-step estimator developed by Arellano and Bover (Journal of Econometrics 68:29–51, 1995), Blundell and Bond (Journal of Econometrics 87:115–143, 1998; Econometric Reviews 19:321–340, 2000), and Roodman (The Stata Journal 9:86–136, 2009). Considering a possible correlation between the lagged dependent variable and the panel fixed effects and the “small T, large N” restriction, Windmeijer’s (Journal of Econometrics 126:25–51, 2005) procedure is implemented so that standard errors become robust after getting small sample size of the dataset under control.
Our results show that only trade has a positive effect on growth, while FDI financial openness and financial integration do not have any impact on growth for the counties’ sample.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Afzal, M. (2007). The impact of globalisation on economic growth of Pakistan. The Pakistan Development Review, 46(4), 723–734.
Ahmed, A. (2011). International financial integration, investment and economic performance in sub-saharan African countries. Global Economy Journal, 11(4), 1–26.
Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29–51.
Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87, 115–143.
Blundell, R., & Bond, S. (2000). GMM estimation with persistent panel data: An application to production functions. Econometric Reviews, 19(3), 321–340.
Calderon, C., & Liu, L. (2003). The direction of causality between financial development and economic growth. Journal of Development Economics, 72(1), 321–334.
Chinn, M., & Ito, H. (2008). A new measure of financial openness. Journal of Comparative Policy Analysis, 10(3), 309–322.
Edgar, D., & Tovar, G. (2012). Financial globalization and financial development in transition countries. Economia: Teoria y Practica, Nueva Epoca, 36(1), 155–178.
Edison, H., Levine, R., Ricci, L., & Slok, T. (2002). International financial integration and economic growth. Journal of International Money and Finance, 21(6), 749–776.
Edwards, S. (2001). Capital mobility and economic performance. Are emerging economies different? NBER Working Paper, 8076.
Kose, A., Prasad, E., & Terrones, M. (2006). How do trade and financial integration affect the relationship between growth and volatility? Journal of International Economics, 69, 176–202.
Lane, R., & Milesi-Ferretti, M. (2008). The drivers of financial globalization. American Economic Review, 98(2), 327–332.
Levine, R. (2001). International financial liberalization and economic growth. Review of International Economics, 9(4), 688–702.
Mougani, G. (2012). An analysis of the impact of financial integration on economic activity and macroeconomic volatility in Africa within the financial globalization contexts. Working Papers, 144.
Osada, M., & Saito, M. (2010). Financial integration and economic growth: An empirical analysis using international panel data from 1974–2007. Bank of Japan Working Paper Series, 10-E-5.
Prasad, E., Kose, A., Rogoff, K., & Wei, S.-J. (2003). Effects of financial globalization on developing countries, some empirical evidence. Economic and Political Weekly, 38(41), 4319–4330.
Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. The Stata Journal, 9(1), 86–136.
Supachai, P. (2012). UNCTAD XIII Doha Mandate and Doha Manar. United Nations Conference on Trade and Development 2012. Retrieved January 6, 2013, from http://unctad.org/en/PublicationsLibrary/iss2012d1_en.pdf
Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of Econometrics, 126(1), 25–51.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2017 Springer International Publishing Switzerland
About this paper
Cite this paper
Moudatsou, A., Xanthos, G. (2017). Finance-Driven Globalization: Empirical Evidence from the Commonwealth of Independent States. In: Bilgin, M., Danis, H., Demir, E., Can, U. (eds) Financial Environment and Business Development. Eurasian Studies in Business and Economics, vol 4. Springer, Cham. https://doi.org/10.1007/978-3-319-39919-5_11
Download citation
DOI: https://doi.org/10.1007/978-3-319-39919-5_11
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-39918-8
Online ISBN: 978-3-319-39919-5
eBook Packages: Business and ManagementBusiness and Management (R0)