Does Globalization Hinder or Incentive Industrialization? Empirical Evidence from Turkiye and Poland
Does Globalization Hinder or Incentive Industrialization? Empirical Evidence from Turkiye and Poland

Summary/Abstract: Research background: Globalization has provided both turmoil and opportunities for most developing countries, as well as Turkiye and Poland. It brings about structural transformation in both countries. Purpose: This paper investigates the effect of economic globalization on industrialization in Turkiye and Poland through annual data covering 1995–2022. Research methodology: The paper performs fully modified ordinary least squares (FMOLS), dynamic ordinary least squares (DOL S), canonical cointegrating regression (CC R) estimators, and the Toda- Yamamoto causality test. Results: The empirical results indicate that foreign direct investment (FDI) inward negatively affects manufacturing value-added (MVA), whereas the labour force positively affects it in Turkiye. However, trade openness has an insignificantly positive influence on MVA. Furthermore, FDI, trade openness, and the labour force significantly and positively affect MVA in Poland. Besides, the Toda-Yamamoto causality test results vary for Turkiye and Poland. Novelty: The work’s originality is examining and comparing the role of trade openness and FDI separately on MVA for Turkiye and Poland. Moreover, this study performs three estimators (FMOL S, DOL S, and CC R) to obtain robust results and investigate the causality relationship among variables for both countries.

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