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Globalization and Socio Economic Welfare of Muslim Countries A Case Study of Indonesia and Malaysia

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  • Economics
  • Political Science


Globalization as a product of capitalism has already changed the economy paradigm of many Muslim countries becomes the industrialist countries. Actually, it is not totally wrong with the industrialist because it makes Muslim’s live easier and challenges. But, the problems now are why many Muslim countries are still under poverties although they have industrialized their economy. Therefore, using Johansen-Jusellius cointegration test and ARDL bound testing; this study is concentrated on assessing the long-run relationship between globalization and socio economic welfare. In addition, by taking Malaysia and Indonesia as a case study, this research also investigates the impact of gross national income (GNI) per capita and globalization indicated by Konjunkturforschungsstelle (KOF) Swiss Economic Institute index to the socio economic indicators, i.e., human development index (HDI) in Muslim countries. Using vector autoregression (VAR) approach, the results show that the impact of globalization in Malaysia HDI is higher than in Indonesia. In contrast, Indonesian HDI seems to be more attributed by the GNI per capita. Keywords: Globalization, ARDL Bound Test, VAREuropean Journal of Social Sciences Vol.25 No.3 (2011), pp. 329-343

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