The Impact of Global Geopolitical Risks on Countries' Economic Growth: Evidence from Emerging Economies | ||||
| التجارة والتمويل | ||||
| Volume 45, Issue 2, June 2025, Page 270-297 PDF (1.33 MB) | ||||
| DOI: 10.21608/caf.2025.443541 | ||||
 View on SCiNiTO | ||||
| Author | ||||
| Eman Mohamed Mohamed Selim | ||||
| the Economics and Public Finance Department, Tanta University. | ||||
| Abstract | ||||
| Political instability and uncertainty caused by geopolitical events can stifle economic growth by influencing trade, financing, technology transfer, foreign direct investment, borrowing rates for firms and governments, and future expectations. Understanding the influence and size of geopolitical events on economic growth is critical for policymakers. The goal of this article is to investigate the impact of global geopolitical risks, as measured by Dario Caldara and Matteo Iacoviello's geopolitical risk (GPR) index, on the economic growth of eighteen emerging economies. The study uses panel regression estimates to evaluate the association between geopolitical risks and economic growth in the selected emerging economies. The study uses annual data from 1995 to 2023 for a basic sample of eighteen cross-section emerging economies and a subsample of the top ten emerging economies. The results show that one standard deviation of the global geopolitical risk index increases economic growth by 25 percent. The robustness check shows that a one percent increase in the country’s specific geopolitical risk index increases economic growth of the top ten emerging economies by 3.6 percent on average. The ARDL results of the basic model show that GPRI has a positive and significant impact on economic growth. In the short run, changes in GPI in the current period have a negative and significant impact on economic growth. The coefficient of the error correction term of -0.649493 means that about 65 percent of the departure from long-run equilibrium is corrected each period. | ||||
| Keywords | ||||
| Economic growth; Geopolitical Risk Index; panel data regression. Fixed Effect Model JEL Classification Codes: D81; F14; O24 | ||||
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