Globalization and Economic Growth: A Sustainability Analysis for South Asia Countries

The effect of globalization on national economies remain a subject of empirical interest. Owing to the spillovers via globalization effects, a number of economies in the South Asian region have recorded phenomenal economic growth. However, the extent to which economic growth can influence development outcomes remains the issue of interest. Therefore, this study adds to the literature by examining the time and modulative effects of economic globalization on some direct regressors of economic growth. The study focused on eight South Asian countries from 1996 to 2019 for which data on globalization were sourced from Konjunkturforschungsstelle Globalization index, World Governance Indicators and International country risk database. A pooled autoregressive-distributed lag (ARDL) approach was utilized in addressing the objective of this study. Consequently, the findings suggest that while globalization influences economic growth positively, rising interest rates and inflationary pressures can unsustain this influence. Likewise, the modulated estimates show that economic globalization can be utilized as a tool to stimulate investment as well as to check corruption and subsequently sustain economic growth in South Asian economies.