The relationship between financial development, globalization and poverty in transition economies: A panel data analysis

Globalization is a multidimensional development process that we feel its influence in every aspect of life. Not all countries have benefited from the development and transformation experienced in this process where the whole world has been rapidly integrated. In other words, some countries adapt to this process quickly due to factors such as the institutional structures of the countries, whether they are open to the outside and whether foreign capital inflows are limited, while for some countries this situation progresses more slowly. But globalization is not just a paradise of opportunities. It should not be forgotten that this process has risks as well as opportunities. The concept of poverty, which is frequently used especially with globalization, reflects a situation that is mentioned and left in limbo in the literature. In other words, is globalization effective in reducing poverty or, on the contrary, does it increase poverty? This study reveals the effects of globalization on poverty, the effects of financial development and technological innovation, which are the driving dynamics of the process in question, on poverty. In this direction, selected transition economies that transitioned from a planned economy to a free market economy. It is examined in two groups as those that entered the European Union (EU) and those that joined the Commonwealth of Independent States (CIS) after leaving the USSR. The effects of globalization on poverty are analyzed with the panel data method, using the data for the 1997-2018 period for the countries in question. The findings obtained from the analysis show that while globalization, technological innovation and financial development reduce poverty in the long term in the transition economy countries that are members of the EU, while these are effective in reducing poverty in the short term in the countries that left the USSR and are located in the CIS. In the long run, however, they do not seem to be effective in reducing poverty.