How Does Deglobalization Affect Economic Growth?

Abstract

The current global landscape has been marked by a series of factors, such as the US-China trade war, disintegration in the European Union (EU), the refugee crisis, and the pandemic, which have impeded the process of globalization. However, similar situations have been experienced in the past, such as colonization, the Great Depression, and the Cold War. The world has experienced periods of globalization (Globalization I, II, and III) as well as periods of deglobalization (Deglobalization I and II). There have been discussions about whether the current decade is experiencing deglobalization and its effects. In this context, the present study aims to investigate the effects of deglobalization on economic growth in 34 OECD countries during the period 2000-2019, in various dimensions. Using panel data analysis, the results indicate that trade and social deglobalization have a negative impact on economic growth, while financial deglobalization and the subdimensions of social deglobalization have a positive influence on growth. Additionally, the study reveals that political globalization is not significantly associated with economic growth. These findings contribute to the ongoing debate on the current state of globalization and its effects on economic development.