Globalization, Financial Integration, and Growth: Any Linkage So Far for Brazil, China, and India?

Abstract

The initiative from the world economic community to integrate different types of economies was globalization that ensured free flow of goods and services, it is popularly known as trade openness. The extension of this effort was to cover the flow of financial capital across the economies in terms of net foreign direct investment and foreign portfolio investment, the combination of these types of capital flow is called financial integration (FI). The primary objective of the policies of globalization and FI was to boost up the global as well as country-specific growth rates. Although a list of works is there in the literature on the related fields for different country or group levels, it is hardly to find such works in the highly emerging economies of the world. This study has strived to investigate whether globalization and FI at all influence the growth of incomes of the commonly accepted three top emerging economies, Brazil, China, and India. This study uses unit roots test, Johansen cointegration test, and causality test in a VAR setup for the period 1990–2016 to find long-run associations and short-run dynamics among the variables. It reveals that all the four indicators have long-run associations for the three countries but the errors are corrected for Brazil and China only. However, only for China, the FI and globalization factors have made a cause to PCGDP; no such causal relations are observed for Brazil and India.

Citation

Chandra Das, R. and Chandra Ghosh, B. (2019), "Globalization, Financial Integration, and Growth: Any Linkage So Far for Brazil, China, and India?", Bhattacharyya, R. (Ed.) The Gains and Pains of Financial Integration and Trade Liberalization, Emerald Publishing Limited, Leeds, pp. 19-31. https://doi.org/10.1108/978-1-78973-999-220191007