How Will Changes in Globalization Impact Growth in South Asia?

The current global crisis may change globalization itself, as both developed and developing countries adjust to global imbalances that contributed to the crisis. Will these changes help or hinder economic recovery and growth in South Asia? This is...

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Bibliographic Details
Main Authors:	Ghani, Ejaz, Anand, Rahul
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ACCOUNTING ADVANCED COUNTRIES ADVANCED ECONOMIES ADVERSE EFFECT AGGREGATE DEMAND AGRICULTURAL SECTOR AGRICULTURE BALANCE OF PAYMENT BALANCE OF PAYMENTS BANK LENDING BANK LOANS BANKS BILATERAL TRADE BONDS BORROWING BUDGET DEFICITS BUSINESS CYCLES CAPITAL FLOW CAPITAL FLOWS CAPITAL INFLOW CAPITAL INFLOWS CAPITAL INVESTMENTS COMMODITIES COMMODITY COMMODITY PRICES COMPETITIVE ADVANTAGES CONSUMERS CONSUMPTION EXPENDITURE COST DIFFERENTIALS COST OF CAPITAL COUNTRY COMPARISONS COUNTRY TO COUNTRY CURRENT ACCOUNT CURRENT ACCOUNT DEFICITS DATA AVAILABILITY DEBT DECLINE IN INVESTMENT DEMOGRAPHIC DEMOGRAPHIC COMPOSITION DEVELOPING COUNTRIES DEVELOPMENT ASSISTANCE DEVELOPMENT BANK DIVIDEND DOMESTIC CREDIT ECONOMIC ACTIVITY ECONOMIC CRISIS ECONOMIC GEOGRAPHY ECONOMIC GROWTH ECONOMIC IMPLICATIONS ECONOMIC OUTLOOK ECONOMIC POLICY EMERGING ECONOMIES EMERGING MARKETS EMPLOYMENT EMPLOYMENT GROWTH ENDOWMENTS EQUITY FLOWS EXPENDITURE EXPENDITURES EXPORT GROWTH EXPORT SHARE EXPORTS EXTERNAL CAPITAL EXTERNAL DEBT EXTERNAL FINANCE EXTERNAL FINANCING EXTERNALITIES FARMERS FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL FLOWS FINANCIAL GLOBALIZATION FINANCIAL INTERMEDIARY FINANCIAL MARKETS FINANCIAL RESTRUCTURING FINANCIAL SERVICES FISCAL DEFICIT FISCAL DEFICITS FISCAL DISCIPLINE FISCAL POLICIES FISCAL POLICY FIXED CAPITAL FOREIGN CAPITAL FOREIGN CAPITAL FLOWS FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN TRADE FUTURE GROWTH GDP GDP PER CAPITA GLOBAL BUSINESS GLOBAL CAPITAL GLOBAL CAPITAL FLOWS GLOBAL DEVELOPMENT FINANCE GLOBAL ECONOMIC PROSPECTS GLOBAL ECONOMY GLOBAL TRADE GLOBALIZATION GOVERNMENT EXPENDITURE GROSS DOMESTIC PRODUCT GROSS FIXED CAPITAL FORMATION GROWTH INVESTMENT GROWTH POTENTIAL GROWTH RATE GROWTH RATES INCOME INCOME LEVELS INCOMES INFLATION INFORMATION SERVICES INFORMATION TECHNOLOGY INFRASTRUCTURE DEVELOPMENT INSURANCE INSURANCE SERVICES INTANGIBLE INTERNATIONAL BANK INTERNATIONAL BEST PRACTICE INVESTING INVESTMENT BEHAVIOR INVESTMENT RATE ITC JOB CREATION LIFE EXPECTANCY LOAN LOAN WAIVERS M2 MACROECONOMIC STABILITY MIDDLE INCOME COUNTRIES MIGRANT REMITTANCES MIGRATION MONETARY FUND MOVABLE GOODS NPL OIL PRICE OIL PRICES OUTPUT OUTSOURCING PENSION PENSION FUNDS PER CAPITA INCOME PORTFOLIO PORTFOLIO FLOWS POSITIVE COEFFICIENT POSITIVE COEFFICIENTS PRICE INCREASES PRIVATE CAPITAL PRIVATE CAPITAL FLOWS PRIVATE DEBT PRODUCTIVITY PRODUCTIVITY GROWTH PUBLIC DEBT PUBLIC SPENDING RAPID EXPANSION RAPID GROWTH RATE OF GROWTH REAL EXCHANGE RATE REAL GDP RECESSIONS REMITTANCE REMITTANCES RESERVES SAFETY NET SAFETY NETS SAVINGS SAVINGS RATE SOCIAL SAFETY NET SOCIAL SAFETY NETS STRUCTURAL CHANGE TAX TAX BREAKS TELECOMMUNICATIONS TRACK RECORD TRADE DEFICIT TRADE DEFICITS TRADE FLOWS TRADING TRANSACTION TRANSPORT VALUE ADDED VOLATILE CAPITAL VOLATILITY WAGES WORLD DEVELOPMENT INDICATORS WORLD ECONOMY
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20091014162658 http://hdl.handle.net/10986/4271

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Summary:	The current global crisis may change globalization itself, as both developed and developing countries adjust to global imbalances that contributed to the crisis. Will these changes help or hinder economic recovery and growth in South Asia? This is the focus of this paper. The three models of globalization--trade, capital, and economic management--may not be the same in the future. Changes in globalization could change the composition of trade flows, capital flows, and economic management, which in turn, could accelerate or restrain growth. South Asia is somewhat peculiar and different from other regions in how it has globalized, although there is a lot of diversity within the region. Its trade characteristics are different. India's growth has been spearheaded by exports of modern services and less by goods exports. Modern service trade tends to be more resilient compared with goods trade. Globalization of services is still at an early stage. So, as consumers pull back in the United States, service trade is likely to be less impacted compared to goods trade. Trade also contributes to growth through knowledge spillovers, externalities, and learning. The global crisis has not reduced the stock of global knowledge. Changes in capital flows are also not likely to have a big impact on growth in South Asia, as South Asia's investments are largely driven by domestic savings. Its dependence on foreign capital is low. South Asia has attracted capital flows that are less volatile. Remittances, which are more resilient, have been the dominant form of capital inflows, exceeding foreign direct investment and other inflows.This global downturn calls for counter-cyclical economic management. But South Asia has limited room for fiscal stimulus, given high debt-to-gross domestic product ratios. Nevertheless, reduced commodity prices have created some fiscal space that can be used for growth enabling infrastructure and safety nets. As South Asia undergoes structural transformation, the region is well positioned to bounce back with global economic recovery.

How Will Changes in Globalization Impact Growth in South Asia?

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