The Impact of Globalization on Unemployment and Economic Growth: Panel Data Analysis for Developing Countries

Abstract

Globalization is a debated issue that is still considered a complex process. This eventually raises the argument that globalization creates a multiplier effect, whether its phenomenon brings a positive or negative impact. The purpose of this study to scrutinize the impact of globalization on unemployment and economic growth of developing countries. For this purpose, the impact of globalization on unemployment and economic growth is investigated the period of 2003-2013. Fixed Effect and Driscoll and Kraay analysis were performed using panel data regression to identify the impact that occurs between the independent variables and the dependent. From the results of the panel data regression, it is known that the economic and political globalization has signific ant impact on the reduction of unemployment. Meanwhile, the variable of social globalization showed a positive influence. In contrast, the variables of economic, social and political globalization have a significantly positive influence on economic growth. Globalization provided the roadmap for trade within countries which is helpful for minimizing unemployment and impressive growth rate. Consequently, we recommend that government should originate such policy that assists the economy to be globalized.