THE INFLUENCE OF GLOBALIZATION ON GDP GROWTH IN EASTERN EUROPE

This study examines the impact of economic, political, and social dimensions of globalization on GDP growth in 18 Eastern European countries from 1999 to 2019. Using a Fixed Effects (FE) model with quadratic terms, it captures both linear and nonlinear relationships, with a notable finding of a U-shaped relationship between Trade De Jure Globalization and GDP growth. This suggests that while early stages of trade policy liberalization may reduce growth, significant gains emerge at higher integration levels. The analysis reveals that, although trade activities contribute positively to GDP growth, financial integration appears to exert downward pressure, potentially reflecting the challenges Eastern European economies face in adjusting to financial liberalization. These results underscore the complexity of globalization’s effects on economic performance in the region and the importance of considering both the nature and depth of globalization when formulating policy.