DISAGGREGATING GLOBALIZATION: EVIDENCE FROM ECONOMIC GROWTH AND EXPORT DYNAMICS IN SAARC ECONOMIES

Abstract

This paper decomposes globalization into three dimensions, i.e., economic, social, and political, and examines their individual and joint effects on economic growth and export performance in the SAARC countries over the period 1990-2024. To estimate the long-run relationships, advanced panel econometric techniques are employed. The techniques include Pesaran and Yamagata (2007) slope heterogeneity test, the Cross-sectionally Augmented IPS (CIPS) unit root test, the Westerlund (2007) cointegration test, and the CS-ARDL approach. The results confirm the presence of both cross-sectional dependence and slope heterogeneity across the panel. The CIPS test shows a mixed order of integration among the variables, which provides justification to use the CS-ARDL. In all the estimated models, the Westerlund cointegration results provide strong evidence of a long-run equilibrium relationship. The error correction terms suggest that around 60% of short-run disequilibrium in the growth models and almost 50% in the export models are corrected each year. This indicates a relatively fast adjustment toward the long-run equilibrium. Results of the CS-ARDL method reveal that combined globalization and its social aspect exert a positive and statistically significant impact on both GDP growth and export performance. On the contrary, political globalization appears insignificant in the growth models and shows a negative effect on export growth