Abstract:
The impact of globalization on economic strength of the countries has been studied extensively in literature for developed as well as developing countries. However, the impact of sub dimensions of globalization and their significance for a developing country like Pakistan is still an untapped area. Countries are liberalizing all over the world and liberalization of sub-dimensions of globalization are affecting different economies in a different manner. These sub-dimensions such as economic, social and political integration are new emerging phenomenon and it is imperative to look at them separately for the developing world and to formulate policies accordingly. This dissertation intends to explore not only the impact of overall globalization on economic growth but also examine the impact of its sub dimensions on economic strength for Pakistan from 1970 to 2013. To measure the impact of globalization and its sub dimensions, KOF index developed by Dreher (2006) has been utilized along with other control variables. Multivariate Joahnsen Cointegration technique is applied to examine the long run as well as short run relationships between the variables under study.
The findings of the dissertation supports the literature that overall globalization is positively and significantly effecting economic strength in the case of Pakistan. Looking at its sub dimensions we find that economic integration is a significant contributor to economic strength in long run while social and political integration with the international community in case of Pakistan is hurting the economy in the long run. Magnitude of economic globalization is very high which overshadows the negative impact of social and political integration resulting in positive impact of overall globalization in the long run. Economic integration is positively affecting the economic strength of Pakistan through spillover effect and flow of trade. Social and Political globalization are negatively affecting the economic strength in the country due to lack of conducive environment and institutions catering specifically to these aspects.
