INVESTIGATING THE RELATIONSHIP BETWEEN GLOBALIZATION AND ECONOMIC GROWTH IN EECA COUNTRIES: THE MEDIATING ROLE OF GOVERNANCE

Globalization has been on an upward trend since the 1980s, consequentially ushering in growth and development benefits that have transformed the welfare standings of many countries worldwide. The Eastern Europe and Central Asia (EECA) region, particularly, cannot be isolated from globalization gains. However, the region has been typified by the ongoing Russo-Ukraine war. Given that EECA economies are intertwined with those of Russia and Ukraine, this paper seeks to investigate the relationship between globalization and economic growth in EECA countries within the framework of the mediating role of governance. By employing the system Generalized Method of Moments (GMM), utilizing endogenous instruments drawn from the lags of the dependent variables as well as the 1 st differences of the independent variables, the results reveal that overall globalization and its economic, social, and political facets do not affect economic growth in EECA countries. The paper also establishes that governance does not mediate the impact of globalization and its dimensions on economic growth in EECA. Similarly, governance dimensions have an insignificant effect in mediating the impact of overall globalization on economic growth in EECA. However, fixed capital formation significantly affects economic growth even though the power of its effect is relatively low. Regardless, globalization may potentially be valuable in stimulating trade, investment, and scientific advancements that are regarded as the foundations of contemporary growth and development.