A tale of two economies: Globalization, inflation, and HDI in Canada and the UK

Abstract

The research evaluates the interplay among globalization, inflation, and the Human Development Index (HDI) in developed economies, particularly Canada and the UK. Economic data at the national level from 1990 to 2023 were analyzed using the KOF Globalization Index, HDI, and the Consumer Price Index. Stationarity testing and ARDL modeling were used to analyze short- and long-term relationships. The study found globalization's positive and insignificant effect on HDI and inflation. In the UK, the effects of globalization on inflation are positive but remain insignificant in both the short and long run. For Canada, the effects of globalization on HDI are mixed, with short-run adverse and insignificant effects and long-run positive and significant effects. Globalization has an insignificant short-run effect on inflation in Canada, turning negative and significant in the long run. The study stresses the pressing issue of crafting country-specific economic policies to balance globalization, human development, and inflation.