Changing Nature of North-South Linkages: Stylized Facts and Explanations, Issues 2007-2280
This paper examines the changing nature of growth spillovers between developed economies, the North, and developing countries, the South, driven by the process of globalization--the phenomenon of rising international trade and financial flows. We use a comprehensive database of macroeconomic and sectoral variables for 106 countries over the period 1960- 2005. We consider the South to be composed of two groups of countries, the Emerging South and the Developing South, based on the extent of their integration into the global economy. Using a panel regression framework, we find that the impact of the Northern economic activity on the Emerging South has declined during the globalization period (1986-2005). In contrast, the growth linkages between the North and Developing South have been rather stable over time. Our findings also suggest that the Northern and Emerging Southern economies have started to exhibit more intensive intra-group growth spillovers.
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5-year averages aggregate Agriculture Asia and Pacific average growth Bretton Woods period business cycle Coefficient estimates constant local currency correlations of GDP cross-group correlations David Vines decoupling developing countries Developing South groups economic activity Emerging Asia emerging markets Emerging South countries Emerging South economies Emerging South GDP Emerging South group Emerging Southern GDP Emerging Southern indices exports and imports financial flows financial linkages GDP and sectoral globalization period groups of countries growth dynamics growth fluctuations growth linkages impact industrial output integration International Monetary Fund intra-group growth spillovers intra-industry trade Kose Kouparitsas Latin America macroeconomic Manufacturing Exports nature of growth North and Emerging North-South Northern and Emerging Northern GDP Northern GDP growth output-weighted percentage point increase pre-globalization period R-squared random effects estimations share significant South growth standard growth stylized facts Table trade and financial trade flows trade openness trade-weighted indices U.S. dollars variables Whole Sample world economy