Globalisation and Economic Development: Evidence from G20 Countries

The connection between globalisation and economic development has been a topic of wide debate among scholars and policymakers over the years. The World Bank views globalisation as a potential tool for fostering economic development, promoting inclusion, and reducing poverty worldwide. The G20, or Group of Twenty, is an international forum comprising 19 countries and the European Union, representing 85% of the world’s GDP, over 75% of global trade, and two-thirds of the world’s population. Therefore, examining the impact of globalisation on G20 countries is highly important. The current research aims to examine both the level of globalisation and its impact on economic development across G20 countries, excluding the European Union and the African Union, from 1990 to 2022. This study employs a balanced panel data approach and relies primarily on secondary data sourced from the World Bank. It employed descriptive statistics, correlation analysis, and both fixed and random effects regression models to investigate the relationship between various dimensions of globalisation namely economic, political, and social and key indicators of economic development, such as GDP per capita (GDPPC), the Human Development Index (HDI), Foreign Direct Investment (FDI), Political Stability Index (PSI), Gini Income Inequality Index (GII) and Unemployment. The study’s findings indicate that economic and social globalisation, along with the HDI and FDI, collectively have a statistically significant positive impact on economic development. We observed that political globalisation demonstrates a negative association with GDP per capita, highlighting the complex and varied impacts of globalisation across its different dimensions. Furthermore, the results indicate that both unemployment and income inequality tend to have a negative correlation with economic growth, although some of the relationships are not statistically significant. This study addresses a gap in the literature by examining the impact of globalisation across the diverse economies of the G20. It provides policymakers with empirical insights, enhancing their understanding of how global forces influence national economies, social structures, and governance frameworks.