Globalisation, Financialisation and Endogenous Thresholds for Premature Deindustrialisation

Özçelik S. E., ÖZMEN E., Taşdemir F.

International Journal of Finance and Economics, 2024 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Publication Date: 2024
  • Doi Number: 10.1002/ijfe.3070
  • Journal Name: International Journal of Finance and Economics
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, ABI/INFORM, Aerospace Database, Business Source Elite, Business Source Premier, Communication Abstracts, EconLit, Geobase, Metadex, vLex, Civil Engineering Abstracts
  • Keywords: financialisation, globalisation, growth, manufacturing industry, premature deindustrialisation, trade openness
  • Middle East Technical University Affiliated: Yes

Abstract

We investigate the pattern and determinants of premature deindustrialisation (PD) for a large panel of advanced, emerging and developing economies. We consider the impacts of international financial integration (de facto financial globalisation), capital account openness (de jure financial globalisation) and financialisation which are often neglected by the literature along with the conventional determinants of industrialisation. The recent literature often employs conventional fixed-effects panel data estimation procedures to estimate and test the postulated inverted-U relationship between manufacturing value-added share in GDP and real income. We employ non-parametric kernel regression to identify the pattern between these variables. In addition, this study analyses the determinants of industrialisation not only by employing the generalised method of moments procedure but also the recent methods allowing to estimate endogenous thresholds. In this context, we also examine whether income and globalisation provide endogenous thresholds for the effect of income on the processes of industrialisation and PD for our samples.