Changing Nature of North-South Linkages

This paper examines the changing nature of growth spillovers between developed economies, the North, and developing countries, the South, driven by the process of globalization?the phenomenon of rising international trade and financial flows. We use a comprehensive database of macroeconomic and sectoral variables for 106 countries over the period 1960- 2005. We consider the South to be composed of two groups of countries, the Emerging South and the Developing South, based on the extent of their integration into the global economy. Using a panel regression framework, we find that the impact of the Northern economic activity on the Emerging South has declined during the globalization period (1986-2005). In contrast, the growth linkages between the North and Developing South have been rather stable over time. Our findings also suggest that the Northern and Emerging Southern economies have started to exhibit more intensive intra-group growth spillovers.Emerging markets;Capital flows;Economic growth;globalization, globalization period, trade intensity, industry trade, trade flows, international trade, trade liberalization, trading partners, trade integration, trade openness, world economy, trade partners, economic integration, financial integration, output growth, export structure, foreign assets, world trade, international financial, bilateral trade, terms of trade, international policy coordination, world growth, vertical specialization, financial markets, intraregional trade, trade volume, unilateral trade, commodity prices, global financial architecture, trade liberalizations, international financial flows, global integration, international financial assets, global financial markets, globalization periods, trading partner, global trade, financial globalization, trade regime, uruguay round, liberalized trade, market liberalization, direction of trade statistics, increasing trade, oil shock, open economies, trading regime, international finance, volume of trade, exchange rates, external shocks, trade partner, economic cooperation, equilibrium model, full liberalization, exchange rate regime, deeper trade integration, international financial markets, increased trade, transition economies, idiosyncratic shocks, oil prices, export markets, international financial statistics, measure of trade, bilateral imports, global shocks, export share, fixed capital formation, regional trade, intermediate products, world output, trade data, trade structure, liberalization of trade, food exports, export growth, political economy, openness measure, global development finance, export sector, trade policies, bilateral trade data