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Convergence or Divergence? The Impacts of Globalisation on Growth and Inequality in Less Developed Countries

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  • Michelle Baddeley
Abstract
This paper assesses the impacts of globalisation on the cross-country comparative patterns of growth and development. In the theoretical section, some of the key linkages between growth, development and globalisation are explored including the positive and negative impacts of globalisation and the constraints on effective development in a globalised world. Some of the key factors emphasised include trade and capital flows as well as computerisation. These issues are then analysed empirically using σ and club convergence models, estimated using panel techniques. The empirical evidence presented indicates that globalisation has been associated with increasing trade and financial flows to less developed countries. It has also coincided with increasing penetration of the Internet suggesting that increases in informational flows have complemented economic and financial linkages, but the empirical evidence also shows that the current era of globalisation has not been associated with convergence in economic outcomes; instead less-developed countries have suffered from increases in international income inequality. In the final section, conclusions and policy implications are presented including a discussion of how international and national development policies could be designed properly to ameliorate tendencies towards growing international disparities in economic growth.

Suggested Citation

  • Michelle Baddeley, 2006. "Convergence or Divergence? The Impacts of Globalisation on Growth and Inequality in Less Developed Countries," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(3), pages 391-410.
    • Handle: RePEc:taf:irapec:v:20:y:2006:i:3:p:391-410
    DOI: 10.1080/02692170600736250
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    3. Anders, Sven M. & Caswell, Julie A., 2009. "The Benefits and Costs of Proliferation of Geographical Labeling for Developing Countries," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 10(1), pages 1-17.
    4. Jingmei Ma & Hongyu Jia, 2015. "The Role of Foreign Direct Investment on Income Convergence in China after Early 1990s from a Spatial Econometric Perspective," Review of Development Economics, Wiley Blackwell, vol. 19(4), pages 829-842, November.
    5. Marta Kuc-Czarnecka & Samuele Lo Piano & Andrea Saltelli, 2020. "Quantitative Storytelling in the Making of a Composite Indicator," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(3), pages 775-802, June.
    6. Vicente German-Soto & Chapa Cantú, 2015. "Cointegration with structural changes between per capita product and income inequality in Mexico," Applied Economics, Taylor & Francis Journals, vol. 47(49), pages 5215-5228, October.
    7. Zerrin K l carslan & Yasemin Dumrul, 2018. "The Impact of Globalization on Economic Growth: Empirical Evidence from the Turkey," International Journal of Economics and Financial Issues, Econjournals, vol. 8(5), pages 115-123.
    8. Schmid, Stefan & Kotulla, Thomas, 2011. "50 years of research on international standardization and adaptation--From a systematic literature analysis to a theoretical framework," International Business Review, Elsevier, vol. 20(5), pages 491-507, October.
    9. Christos N. Pitelis, 2009. "The Sustainable Competitive Advantage and Catching-up of Nations: FDI, Clusters and the Liability (Asset) of Smallness," Management International Review, Springer, vol. 49(1), pages 95-120, February.
    10. Callaghan, Christian William, 2021. "Consequences of deindustrialisation for globalisation: Insights for international business," International Business Review, Elsevier, vol. 30(3).

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