Investigating the relationship between globalization and economic growth in EECA countries: The mediating role of governance

Abstract

Globalisation has been on an upward trend since the 1980s, consequentially ushering in growth and development benefits that has transformed the welfare standings of many countries worldwide. The Eastern Europe and Central Asia region, particularly, cannot be isolated from globalisation gains. However, the region has currently been typified with the on-going Russo-Ukraine war. Given that EECA economies are intertwined to that of Russia and Ukraine, this paper seeks to investigate the relationship between globalisation and economic growth in EECA countries within the framework of the mediating role of governance. The results revealed that overall, globalization and its economic, social, and political dimensions do not affect economic growth in EECA countries. The article also established that governance does not mediate the impact of globalization and its dimensions on economic growth in EECA. Similarly, governance dimensions were found to have an insignificant effect in mediating the impact of overall globalization on economic growth in EECA. However, fixed capital formation was found to significantly affect economic growth in EECA even though the power of its effect is relatively low. Irrespective, globalization may potentially be valuable in stimulating trade, investments, and scientific advancements that are regarded as the foundations of contemporary growth and development.

Keywords

• EECA
• Globalisation
• Governance
• KOF globalisation index
• Mediating effects
• System GMM