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Threshold effects of globalization on economic growth: insights from Azerbaijan using regression and Fuzzy C-Means

Authors: Latafat Gardashova; Rasim Aliyev;

Threshold effects of globalization on economic growth: insights from Azerbaijan using regression and Fuzzy C-Means

Abstract

The object of this research is the relationship between globalization and economic growth in Azerbaijan, analyzed using regression analysis and Fuzzy C-Means (FCM) clustering. While globalization is often linked to economic expansion, its effects in resource-dependent economies remain unclear. This study examines whether increasing globalization, measured by the KOF Globalization Index and its sub-indices (economic, social, and political globalization), positively impacts GDP per capita growth. Regression analysis reveals significant negative impacts of globalization on GDP per capita growth, with social globalization showing the strongest negative effect (coefficient: –10.93, p<0.01), followed by political (–9.55, p<0.01) and economic globalization (–5.96, p<0.05). Conversely, institutional quality, measured by the rule of law, significantly promotes growth (10.22, p<0.01). Fuzzy C-Means clustering further identifies clear nonlinear (threshold) patterns: moderate globalization levels (KOF Globalization Index≈49.36) correspond with the highest average GDP per capita growth (≈14.47), whereas lower (≈32.13) and higher (≈62.52) levels associate with significantly lower or negative growth (–10.91 % and 1.29 %, respectively). These findings indicate that excessive global integration can undermine economic stability in resource-dependent economies at the early stages of industrialization, such as Azerbaijan. In practice, globalization should be approached strategically. Policymakers must strengthen institutions, enhance long-term investment policies, and prioritize industrial learning before promoting deeper integration. A balanced approach will maximize globalization’s benefits while minimizing risks.

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Keywords

індекс глобалізації KOF, ресурсозалежна економіка, Azerbaijan, кластеризація з нечіткими С-середніми, KOF Globalization Index, економічна інтеграція, economic integration, threshold effects, Азербайджан, fuzzy C-Means clustering, порогові ефекти, resource-dependent economy

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
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