The study develops an index of globalization covering its three main dimensions: economic integration, social integration, and political integration. Using panel data for 123 countries in 1970–2000 it is analysed empirically whether the overall index of globalization as well as sub-indexes constructed to measure the single dimensions affect economic growth. As the results show, globalization indeed promotes growth. The dimensions most robustly related with growth refer to actual economic flows and restrictions in developed countries. Although less robustly, information flows also promote growth whereas political integration has no effect.

/pdf/does-globalization-affect-growth-evidence-from-a-new-index-4vsnrtsy3u.pdf

Does Globalization Affect Growth? : evidence from a new Index of Globalization

We investigate corporate transparency, defined as the availability of firm-specific information to those outside publicly traded firms, and viewed as the joint output of multi-faceted systems whose components collectively produce, gather, validate and disseminate information to market participants. We factor analyze an extensive range of measures capturing countries' firm-specific information environments, and isolate two factors interpreted as financial transparency and governance transparency. We investigate whether these factors vary with the countries' legal/judicial regimes and political economies. Our main multivariate result is that the governance transparency factor is primary related to a country's legal/judicial regime, while the financial transparency factor is primarily related to political economy.

What Determines Corporate Transparency

Is a country's ability to enforce contracts an important determinant of comparative advantage? To answer this question, I construct a variable that measures, for each good, the proportion of its intermediate inputs that require relationship-specific investments. Combining this measure with data on trade flows and judicial quality, I find that countries with good contract enforcement specialize in the production of goods for which relationship-specific investments are most important. According to my estimates contract enforcement explains more of the pattern of trade than physical capital and skilled labor combined.

Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade

This report uses 42 distinct variables to create an index ranking of countries around the world based on policies that encourage economic freedom, and places Australia at number 10. Executive summary The index published in Economic Freedom of the World measures the degree to which the policies and institutions of countries are supportive of economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of privately owned property. Forty-two variables are used to construct a summary index and to measure the degree of economic freedom in five broad areas: 1 Size of Government; 2 Legal System and Property Rights; 3 Sound Money; 4 Freedom to Trade Internationally; 5 Regulation. Since our first publication in 1996, numerous studies have used the data published in Economic Freedom of the World to examine the impact of economic freedom on investment, economic growth, income levels, and poverty rates. Virtually without exception, these studies have found that countries with institutions and policies more consistent with economic freedom have higher investment rates, more rapid economic growth, higher income levels, and a more rapid reduction in poverty rates. The EFW index now covers 152 countries and territories. Data are available for approximately 100 nations and territories back to 1980, and many back to 1970.3 This data set makes it possible for scholars to analyze the impact of both cross-country differences in economic freedom and changes in that freedom across a threedecade time frame.

Economic freedom of the world

Nicoletti and Scarpetta look at differences in the scope and depth of pro-competitive regulatory reforms and privatization policies as a possible source of cross-country dispersion in growth outcomes. They suggest that, despite extensive liberalization and privatization in the OECD area, the cross-country variation of regulatory settings has increased in recent years, lining up with the increasing dispersion in growth. The authors then investigate empirically the regulation-growth link using data that cover a large set of manufacturing and service industries in OECD countries over the past two decades and focusing on multifactor productivity (MFP), which plays a crucial role in GDP growth and accounts for a significant share of its cross-country variance. Regressing MFP on both economywide indicators of regulation and privatization and industry-level indicators of entry liberalization, the authors find evidence that reforms promoting private governance and competition (where these are viable) tend to boost productivity. In manufacturing the gains to be expected from lower entry barriers are greater the further a given country is from the technology leader. So, regulation limiting entry may hinder the adoption of existing technologies, possibly by reducing competitive pressures, technology spillovers, or the entry of new high-technology firms. At the same time, both privatization and entry liberalization are estimated to have a positive impact on productivity in all sectors. These results offer an interpretation to the observed recent differences in growth patterns across OECD countries, in particular between large continental European economies and the United States. Strict product market regulations - and lack of regulatory reforms - are likely to underlie the relatively poorer productivity performance of some European countries, especially in those industries where Europe has accumulated a technology gap (such as information and communication technology-related industries). These results also offer useful insights for non-OECD countries. In particular, they point to the potential benefits of regulatory reforms and privatization, especially in those countries with large technology gaps and strict regulatory settings that curb incentives to adopt new technologies. This paper - a product of the Social Protection Team, Human Development Network - is part of a larger effort in the network to understand what drives productivity growth.

Regulation, Productivity and Growth: OECD Evidence

Economic Freedom of the World: 2002 Annual Report

References & Data Sources

Physics-informed machine learning is gaining attention, but suffers from training issues.

Neural networks learn to speed up simulations

WiFi is being pushed to higher speeds and longer ranges and, in the process, is acquiring more spectrum to help it on its way.

Frequency spread

Measurement has driven research groups to home in on the most popular datasets, but that may change as metrics shift to real-world quality.

Chris Edwards

Papers

Economic Freedom of the World: 2002 Annual Report

References & Data Sources

Neural networks learn to speed up simulations

Frequency spread

Competition makes big datasets the winners