Economic analysis of the new normal in G20 economies

Throughout the history of humanity, there have always been certain changes and transformations, in particular in economic developments. New orders emerging as an outcome of these changes and transformations have become the new normal for mankind. This paper examines the notions of "normal" and "new normal" from a conceptual point of view. The notion of "normal" refers to the routine behaviors and rules that communities and individuals are accustomed to in their daily routines. It encompasses economic, social, environmental, political and cultural norms that are considered standard in a specific period of time. However, major shifts and crises across the globe have transformed the notion of "normal" and created a so-called "new normal". The "new normal" denotes the new ways of living and doing business to which societies and economies have adapted in the wake of major shifts and crises. The "new normal" entails the permanence of these changes and the redefinition of social norms In economic context, the "new normal" is the focus of business models on digitalization, with concepts such as sustainability and flexibility gaining importance. The 21st century's "new normal" is the so-called "new economy" or "knowledge economy". The new economy has been investigated and its building blocks discussed for a while in the history of economics. The new economy implies a transformation process in which the concepts of digitalization and sustainability are at the forefront. In this process, G20 countries serve a critical role. The G20 brings together the world's major economies and plays crucial role in shaping global economic policies. The transformation and change are taking place in the economic, political, social and environmental spheres of these countries. The new economy seeks to achieve more inclusive and sustainable development by transforming traditional economic models. In this context, G20 countries are making joint efforts to accelerate the digital transformation of the global economy and its transition to a knowledge-based economy. The aim of this research is to investigate the relationship between physical capital investment, which represents the traditional economy, and internet usage data, which represents the modern economy, and development. To this end, the data of G20 countries for the period 1992-2021 have been empirically examined. The thesis consists of four main chapters The first chapter discusses and explores conceptual and theoretical dimensions, in particular the concepts of "normal" and "new normal". In the second chapter, G20 countries are scrutinized and evaluated in terms of economic indicators during the period defined as the new normal. The third chapter examines the recent shifts and transformations of the G20 economies under five major topics. The empirical part, which is the fourth chapter of the study, comprises the results of the domestic and foreign literature review, econometric methodology and empirical findings. The final chapter concludes the study with conclusions and suggestions. With regard to the empirical results of the study, the correlation results between the variables are presented first, and the results indicate that there is a positive and strong correlation between the dependent and independent variables. Preliminary tests on the variables and the panel have revealed cross-sectional dependence and heterogeneity. This is a consequence of the necessity to use second-generation tests. Bootstrap (2004) Panel Unit Root test, which is one of the second generation tests, has been applied for the stationarity analysis of the model with horizontal cross-section dependence and heterogeneity. Westerlund and Edgerton (2007) LM Bootstrap Panel Cointegration test has been applied to test whether there is a long-run relationship between the variables and the existence of a cointegrated relationship has been found. Finally, Augmented Mean Group (AMG) estimators have been used to estimate the coefficients of the variables that are found to be cointegrated and the validity of these estimates for the countries subject to the research has been investigated. The rates of impact on the economic development indicator in the data studied, representing the physical capital and the knowledge economy of the countries included in the research, have been found. In addition, as a result of the analysis, it is possible to make an assessment about whether the new economy, i.e. the new normal process, has started in the countries depending on the rates of impact on the human development index.