The Impact of the Global Financial Crisis on the Economic Development in the Eurasian Region

Yıl 2017, Cilt: 1 Sayı: 1, 155 - 173, 01.06.2017

Natalya Ketenci

Öz

This study presents an empirical
analysis of  the  impact 
of  the  global financial crisis on the economic
development of the Eurasian region. The region covers fifteen states of the
former Soviet Union: Armenia, Azerbaijan, Belarus, Estonia, Georgia,
Kazakhstan, Kyrgyz Republic, Latvia, Lithuania, Moldova, Russian Federation,
Tajikistan, Turkmenistan, Ukraine, Uzbekistan. Emerging economies of estimated countries are highly attractive
for foreign investors, who stimulate economic growth in the region. This
paper  particularly investigates the
relationship between economic growth and international capital flows in the
Eurasian region before and after the global financial crisis. Panel estimations using annual data for the period
1990-2014 are made applying the Generalized Method of Moments
estimation technique for the
dynamic panel data, developed by Hansen (1982).
Empirical results reveal that the main determinant of the regions’
economic development is FDI
inflow. This study finds evidence that after the global financial crisis,
economic growth in the region becomes more responsive to capital flows compared
to the pre-crisis period.

Anahtar Kelimeler

Economic growth, capital flows, generalized method of moments (GMM), Eurasia, dynamic panel data

Kaynakça

• Aizenman, J., Jinjarak, Y. and P. Donghyun (2013). Capital flows and economic growth in the era of financial integration and crisis, 1990- 2010. Open Economies Review, 24(3), 371-396.
• Anwar, S. and S. Sun (2011). Financial development, foreign investment and economic growth in Malaysia. Journal of Asian Economics, 22(4), 335-342.
• Apergis, N., Lyroudi, K. and A. Vamvakidis (2008). The relationship between foreign direcgt investment and economic growth: evidence from transition countries. Transition Studies Review, 15, 37-51.
• Aric, K.H. (2014). Effect of financial development on economic growth in the European Union: A panel data analysis. International Journal of Economic Practices and Theories, 4(4), July, 466-471.
• Bailliu, Jeannine N. (2000). Private Capital Flows, Financial Development, and Economic Growth in Developing Countries. Working Papers 00-16, Bank of Canada.
• Barro, R.J. (1991). Economic growth in a cross-section of countries. Quarterly Journal of Economics, 100(2), 407-443.
• Barro, R. and X. Sala-i-Martin (1995). Economic Growth. New York: McGraw-Hill.
• Barzegar, F. (2014). Investigation of influence of capital market on economic growth of Islamic countries that are member in organization of Islamic conference (OIC) over 1990-2009. Journal of Applied Environmental and Biological Sciences, 14(2), 98-104.
• Beck, T. and R. Levine (2004). Stock markets, banks and growth: panel evidence. Journal of Banking and Finance, 28, 423-442.
• Bildirici, M.E. and F. Kayikci (2013). Effects of oil production on economic growth in Euroasian countries: Panel ARDL approach. Energy, 49, January, 156-161.
• Choong, C.K., Baharumshah, A. Z., Yusop, Z. and M.S. Habibullah (2010). Private capital flows, stock market and economic growth in developed and developing countries: A comparative analysis. Japan and the World Economy, 22(2), 107-117.
• Curwin, K. D. and M.M. Mahutga (2014). Foreign direct investment and economic growth: New evidence from post-socialist transition countries. Social Forces, 92(3), 1159-1187.
• Dell’Anno, R. and S. Villa (2013). Growth in transition countries. Economics of Transition, 21(3), 381-417.
• Doytch, N. and M., Uctum (2011). Does the worldwide shift of FDI from manufacturing to services accelerate economic growth? A GMM estimation study.Journal of International Money and Finance, 30(3), 410-427.
• Edwards, S. (1993). Trade Policy, Exchange Rates and Growth. NBER Working Paper No. 4511.
• Edwards, S. (2001). Capital mobility and economic performance: are emerging economies different? NBER Working paper 8076, January, National Bureau of Economic Research, Cambridge.
• Elkomy, S., Ingham, H. and R. Read (2016) Economic and political determinants of the effects of FDI on growth in transition and developing countries. Thunderbird International Business review, published online, DOI: 10.1002/tie.21785.
• Fan, P.H. (2013). Essays in Capital Mobility, Growth, and Macroeconomic Volatility. Theses and Dissertations. Paper 349.
• Favara, G. (2003). An empirical reassessment of the relationship between finance and growth. International Monetary Fund Working Paper Series, WP/03/123, 1-46.
• Hadri, K. (2000). Testing for stationarity in heterogenous panel data. Econometrics Journal, 3(2), 148-161.
• Hansen, L.P., (1982). Large sample properties of generalized method of moments estimators. Econometrica, 50, 1029–1054. Holland, D., Liadze, I., Rienzo, C. and D. Wilkinson (2013). The relationship between graduates and economic growth across countries. BIS Research Paper, 110.
• Gemmell, N. (1996). Evaluating the impacts of human capital stocks and accumulation on economic growth: some new evidence. Oxford Bulletin of Economics and Statistics,58(1), 9-28.
• Gheeraert, L. and J.M. Mansour (2005). On the impact of private capital flows on economic growth and development. CEB Working paper 05/003, Centre Emile Bernheim, Research Institute in Management Sciences.
• Glewwe, P., Maiga, E. and H. Zheng (2014). The contribution of education to economic growth: A review of the Evidence, with special attention and an application to Sub-Saharan Africa. World Development, 59, 379-393.
• Gourinchas, P.O. and O. Jeanne (2013). Capital flows to developing countries: The allocation puzzle. Review of Economic Studies, 80(4), 1484-1515.
• Im, K.S., Pesaran, M.H. and Y. Shin (2003). Testing for unit root in heterogenous panels. Journal of Econometrics, 115(1), 53-74.
• Kose, M.A., Prasad, E., Rogoff, K. and S.J. Wei (2009). Financial Globalization: A Reappraisal. IMF Staff Papers, 56(1), 8-62.
• Kyaw, K.S. and R. Macdonald (2009). Capital flows and growth in developing countries: A dynamic panel data analysis. Oxford Development Studies, 37(2), 101-122.
• Kwiatkowski, D., Phillips, P.C.B, Schmidt, P. and Y. Shin (1992). Testing the null hypothesis of stationarity against the alternative of a unit root: How sure are we that economic time series have a unit root? Journal of Econometrics, 44, 159-178.
• Levy-Orlik, N. (2013) Financialization and economic growth in developing countries: The case of the Mexican economy. International Journal of Political Economy, 42(4), 108-127. Loyaza, N. and R. Ranciere (2006) .Financial development, financial fragility, and growth. Journal of Money Credit and Banking, 38, 1051- 1076.
• Lucas, R. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22, July, 3-42.
• Maddala, G.S. and S. Wu (1999). A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, 61, 631–652.
• Mankiw, N. G., Romer, D. and D. Weil (1992). A contribution to the empirics of economic growth. Quarterly Journal of Economics 107(2), 407-437. Mankiw, N. G., Romer, D. and D. Weil (1992). A contribution to the empirics of economic growth. Quarterly Journal of Economics 107(2), 407-437.
• Mody, A and A.P. Murshid (2011). Growth from international capital flows: the role of volatility regimes. IMF Working Paper, WP/11/90.
• Obstfeld, M. (2009). International finance and growth in developing countries: What have we learned? IMF Staff Papers, 56(1), 63-111.
• Omri, A and B. Kahouli (2014). The nexus among foreign investment, domestic capital and economic growth: Empirical evidence from the MENA region. Research in Economics, 68(3), 257-263.
• Pagano, M. (1993). Financial markets and growth: An overview. European Economic Review, 37(2-3): 613-622.
• Prasad, E., Rajan, R. and A. Subramanian (2006). Patterns of International Capital Flows and their Implications for Economic Development. Presented at the symposium, “The New Economic Geography: Effects and Policy Implications,” The Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming, August 24–26.
• Romer, P. (1989). Capital accumulation and the theory of long-run growth, in R. Barro, Ed., Modern business cycle theory. Harvard University Press, Cambridge, Mass.
• Rodriguez-Pose, A. and V. Tselios (2010). Inequalities in income and education and regional economic growth in western Europe. The Annals of Regional Science, 44(2), 349-375.
• Rousseau, P. and P. Wachtel (2011). What is happening to the impact of financial deepening on economic growth? Economic Inquiry, 49(1), January, 276-288.
• Shen, C.H., Lee, C.C. and C.C. Lee (2010). What makes international capital flows promote economic growth? An international cross-country analysis. Scottish Journal of Political Economy, 57(5), 515-546.
• Shiells, C.R., Pani, M. and E. Jafarov (2005). Is Russia still driving regional economic growth? IMF Working Paper, WP/05/192, September.
• Varma, S. (2009). Capital mobility and growth in the developing worlds: An empirical investigation. Indore Management Journal, 1(2): 1-17.
• Vo, X.V. (2010). Net private capital flows and economic growth- the case of emerging Asian economies. Applied Economics, 42(24), 3135- 3146.
• Zhang, J., Wang, L. and S. Wang (2012). Financial development and economic growth: Recent evidence from China. Journal of Comparative Economics, 40(3), 393-412.