The force of globalization reshaping the local institutions: evidence from the Organization of Islamic Cooperation member countries

Abstract

Purpose

The authors reinforce the existing literature on the effect of overall globalization on institutional quality (IQ), while incorporating the effects of economic, political and social aspects of globalization, human capital, government expenditure and population growth. To this end, the authors estimate panel data models for a sample of 36 member countries of the Organization of Islamic Cooperation (OIC) during 1984–2016.

Design/methodology/approach

The authors employ the cross-sectional autoregressive distributed lags (CS-ARDL) approach.

Findings

The study’s investigation affirms the presence of an inverted U-shaped (nonlinear) relation between overall globalization and IQ indexes for the sample countries, which suggests no additional room for improvement in IQ. It also underpins the existence of an inverted-U-shaped (nonlinear) relation between political globalization and IQ. In contrast, economic and social globalizations have a U-shaped relation with IQ, implying more scope for improvement.

Research limitations/implications

The findings have key policy implications. First, policy makers should consider a long-run approach for improving IQ and globalization over time. Second, quick reforms in the short run may not improve IQ.

Practical implications

The results suggest that policy makers should approach the globalization process from a long-run perspective as well by designing appropriate strategies to provide a continuous but gradual increase in globalization so as to systematically monitor the threshold limits to IQ from improving globalization

Originality/value

To the best of the authors’ knowledge, this work is the first to empirically investigate the overall role of globalization in promoting IQ under the conditions of short-run heterogeneity and long-run homogeneity. The authors focus on the member countries of the OIC, many of which are ruled by authoritarian regimes and suffer from a poor domestic institutional setting.

Citation

Samargandi, N., Sohag, K., Kutan, A. and Alandejani, M. (2021), "The force of globalization reshaping the local institutions: evidence from the Organization of Islamic Cooperation member countries", International Journal of Emerging Markets, Vol. 16 No. 8, pp. 1943-1963. https://doi.org/10.1108/IJOEM-10-2019-0794