Skip to main content

Advertisement

SpringerLink
Log in

Nexus Between Globalization, Income Inequality and Human Development in Indonesian Economy: Evidence from Application of Partial and Multiple Wavelet Coherence

  • Original Research
  • Published:
Social Indicators Research Aims and scope Submit manuscript

An Editorial Expression of Concern to this article was published on 07 July 2022

This article has been updated

Abstract

This paper aims at understanding the vigorous connection between globalization, income inequality and human development in Indonesian economy. This study employs Morlet’s wavelet approach. Precisely, it applies several implements of methods including continuous wavelet power spectrum, wavelet coherence, partial and multiple wavelet coherence through a monthly data series during 1990–2016. The outcomes reveal that connections among variables progress over frequency and time domain. From the frequency domain point of view, the current study discovers noteworthy wavelet coherences and robust leads and lag linkages. From the time-domain sight, the results display robust but not consistent associations among the considered variables. From an economic point sight, the wavelet method displays that globalization enhances the income inequality in Indonesian economy. This study emphasizes the significance of having organized strategies by policymakers to cope up with 2–3 years of occurrence of huge inequality in income distribution in Indonesia. Also, the policymakers should keep a watch on co-movements between globalization, income inequality and human development index. The current study presents a unique finding on association and co-movement between globalization, income equality and human development index in Indonesian economy. These outcomes should be of interest to researchers, policymakers and economists.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7
Fig. 8

Similar content being viewed by others

Change history

Notes

  1. Foreign direct investment and trade (export and import) to the GDP ratio is used as a proxy of globalization.

References

  • Afshan, S., Sharif, A., Loganathan, N., & Jammazi, R. (2018). Time–frequency causality between stock prices and exchange rates: Further evidences from cointegration and wavelet analysis. Physica A: Statistical Mechanics and Its Applications, 495, 225–244.

    Article  Google Scholar 

  • Akhter, S. H. (2004). Is globalization what it’s cracked up to be? Economic freedom, corruption, and human development. Journal of World Business, 39(3), 283–295.

    Article  Google Scholar 

  • Akita, T., & Miyata, S. (2018). Spatial inequalities in Indonesia, 1996–2010: A hierarchical decomposition analysis. Social Indicators Research, 138(3), 829–852.

    Article  Google Scholar 

  • AlAli, M. S. (2016). Forecasting-based carry trade using pegged currency: A case of Omani rial. The Economics and Finance Letters, 3(2), 21–29.

    Article  Google Scholar 

  • Aloui, C., & Hkiri, B. (2014). Co-movements of GCC emerging stock markets: New evidence from wavelet coherence analysis. Economic Modelling, 36, 421–431.

    Article  Google Scholar 

  • Aloui, C., Hkiri, B., Hammoudeh, S., & Shahbaz, M. (2018). A multiple and partial wavelet analysis of the oil price, inflation, exchange rate, and economic growth nexus in Saudi Arabia. Emerging Markets Finance and Trade, 54(4), 935–956.

    Article  Google Scholar 

  • Amiti, M., & Cameron, L. (2012). Trade liberalization and the wage skill premium: Evidence from Indonesia. Journal of International Economics, 87(2), 277–287.

    Article  Google Scholar 

  • Amiti, M., & Davis, D. (2012). Firms, trade, and wages: theory and evidence. Review of Economic Studies, 79(1), 1–36.

    Article  Google Scholar 

  • Atif, S. M., Srivastav, M., Sauytbekova, M., & Arachchige, U. K. (2012). Globalization and income inequality: a panel data analysis of 68 countries. Retrieved from https://www.econstor.eu/bitstream/10419/65664/3/Atif_Globalization_Inequality.pdf.

  • Basu, P., & Guariglia, A. (2007). Foreign direct investment, inequality, and growth. Journal of Macroeconomics, 29(4), 824–839.

    Article  Google Scholar 

  • Ben-Salha, O., Hkiri, B., & Aloui, C. (2018). Sectoral energy consumption by source and output in the US: New evidence from wavelet-based approach. Energy Economics, 72, 75–96.

    Article  Google Scholar 

  • Bergh, A., & Nilsson, T. (2011). Globalization and absolute poverty—A panel data study. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2363784.

  • Betke, F. (2001). The’Family-in-Focus’ approach: Developing policy-oriented monitoring and analysis of human development in Indonesia (No. inwopa01/13).

  • Bhensdadia, R. R., & Dana, L. P. (2004). Globalisation and rural poverty. International Journal of Entrepreneurship and Innovation Management, 4(5), 458–468.

    Article  Google Scholar 

  • Bjørnstad, R., & Skjerpen, T. (2006). Trade and inequality in wages and unemployment. Economic modelling, 23(1), 20–44.

    Article  Google Scholar 

  • Blau, D. M. (1999). The effect of income on child development. Review of Economics and Statistics, 81(2), 261–276.

    Article  Google Scholar 

  • Borensztein, E., De Gregorio, J., & Lee, J. W. (1998). How does foreign direct investment affect economic growth? 1. Journal of International Economics, 45(1), 115–135.

    Article  Google Scholar 

  • Borjas, G. J., & Ramey, V. A. (1994). Time-series evidence on the sources of trends in wage inequality. The American Economic Review, 84(2), 10–16.

    Google Scholar 

  • Bowles, P. (2005). Globalization and neoliberalism: A taxonomy and some implications for anti-globalization. Canadian Journal of Development Studies, 26(1), 67–87.

    Article  Google Scholar 

  • Çelik, S., & Basdas, U. (2010). How does globalization affect income inequality? A panel data analysis. International Advances in Economic Research, 16(4), 358–370.

    Article  Google Scholar 

  • Cheng, M., Chung, L., Tam, C. S., Yuen, R., Chan, S., & Yu, I. W. (2012). Tracking the Hong Kong Economy. Occasional Paper, 3, 2012.

  • Chudnovsky, D., & Lopez, A. (1999). Globalization and developing countries: Foreign direct investment and growth and sustainable human development. UN. Retrieved from http://old.tci-network.org/media/asset_publics/resources/000/000/788/original/globalization-chudnovsky.pdf.

  • Dechprom, S., & Jermsittiparsert, K. (2018). Foreign aid, foreign direct investment and social progress: A cross countries analysis. Opcion, 34(86), 2086–2097.

    Google Scholar 

  • Dreher, A., & Gaston, N. (2008). Has globalization increased inequality? Review of International Economics, 16(3), 516–536.

    Article  Google Scholar 

  • Dunning, J. H. (1993). Globalisation: The challenge for national economic regimes. Dublin: Economic and Social Research Institute (ESRI).

    Google Scholar 

  • Edwards, S. (1997). Trade policy, growth, and income distribution. The American Economic Review, 87(2), 205–210.

    Google Scholar 

  • Edwards, L. (2001). Globalisation and the skills bias of occupational employment in South Africa. South African Journal of Economics, 69(1), 40–71.

    Article  Google Scholar 

  • Fatah, F. A., Othman, N., & Abdullah, S. (2012). Economic growth, political freedom and human development: China, Indonesia and Malaysia. International Journal of Business and Social Science, 3(1), 291–299.

    Google Scholar 

  • Feenstra, R. C., & Hanson, G. H. (1996). Globalization, outsourcing, and wage inequality (No. w5424). Cambridge: National Bureau of Economic Research.

    Book  Google Scholar 

  • Feenstra, R. C., & Hanson, G. H. (1997). Foreign direct investment and relative wages: Evidence from Mexico’s maquiladoras. Journal of International Economics, 42(3–4), 371–393.

    Article  Google Scholar 

  • Francois, J. F., & Nelson, D. R. (2003). Globalization and relative wages: Some theory and evidence. Nottingham: University of Nottingham.

    Google Scholar 

  • Gaston, N., & Nelson, D. (2002). Integration, foreign direct investment and labour markets: Microeconomic perspectives. The Manchester School, 70(3), 420–459.

    Article  Google Scholar 

  • Harvey, H. (2018). Bilateral J-curve between Philippines and trading partners: Linear and non-linear approach. Asian Economic and Financial Review, 8(2), 131–144.

    Article  Google Scholar 

  • Helleiner, G. K. (2001). Markets, politics and globalization: Can the global economy be civilized? Journal of Human Development, 2(1), 27–46.

    Article  Google Scholar 

  • Henry, U. (2014). Globalization and environmental issues: A new framework for security analysis. Humanities and Social Sciences Letters, 2(4), 209–216.

    Google Scholar 

  • Hill, H. (2008). Globalization, inequality, and local-level dynamics: Indonesia and the Philippines. Asian Economic Policy Review, 3(1), 42–61.

    Article  Google Scholar 

  • Hkiri, B., Hammoudeh, S., Aloui, C., & Shahbaz, M. (2018). The interconnections between US financial CDS spreads and control variables: New evidence using partial and multivariate wavelet coherences. International Review of Economics & Finance, 57, 237–257.

    Article  Google Scholar 

  • Hossain, M. S., Kibria, M. G., & Islam, M. S. (2018). Does globalization affect the economic growth of Bangladesh?—An econometric analysis. Asian Economic and Financial Review, 8(12), 1384–1393.

    Article  Google Scholar 

  • Jermsittiparsert, K., Sriyakul, T., & Rodoonsong, S. (2013). Power(lessness) of the state in the globalization era: Empirical proposals on determination of domestic paddy price in Thailand. Asian Social Science, 9(17), 218–225.

    Google Scholar 

  • Jung, K. (2015). Inequality and unemployment management. Asian Journal of Economics and Empirical Research, 2(2), 62–73.

    Google Scholar 

  • Kai, H., & Hamori, S. (2009). Globalization, financial depth and inequality in Sub-Saharan Africa. Economics Bulletin, 29(3), 2025–2037.

    Google Scholar 

  • Kis-Katos, K., & Sparrow, R. (2015). Poverty, labor markets and trade liberalization in Indonesia. Journal of Development Economics, 117, 94–106.

    Article  Google Scholar 

  • Kos-Stanišić, L. (2007). The process of globalization and ethnic minorities in Latin America. In Etničke manjine i sigurnost u procesima globalizacije.

  • Kusharjanto, H., & Kim, D. (2011). Infrastructure and human development: the case of Java, Indonesia. Journal of the Asia Pacific Economy, 16(1), 111–124.

    Article  Google Scholar 

  • Lahoti, R., Jayadev, A., & Reddy, S. (2016). The global consumption and income project (GCIP): An overview. Journal of Globalization and Development, 7(1), 61–108.

    Article  Google Scholar 

  • Lal, D. (2000). The challenge of globalization: There is no third way. In I. Vásquez (Ed.), Global fortune: The stumble and rise of world capitalism (pp. 29–42). New York: Cato Institute.

    Google Scholar 

  • Le, Q. H., & Nguyen, H. N. (2019). The impact of income inequality on economic growth in Vietnam: An empirical analysis. Asian Economic and Financial Review, 9(5), 617–629.

    Article  Google Scholar 

  • Lee, J. E. (2010). Inequality in the globalizing Asia. Applied Economics, 42(23), 2975–2984.

    Article  Google Scholar 

  • Lindert, P. H., & Williamson, J. G. (2003). Does globalization make the world more unequal? In P. H. Lindert & J. G. Williamson (Eds.), Globalization in historical perspective (pp. 227–276). Chicago: University of Chicago Press.

    Chapter  Google Scholar 

  • Mah, J. S. (2003). A note on globalization and income distribution—The case of Korea, 1975–1995. Journal of Asian Economics, 14(1), 157–164.

    Article  Google Scholar 

  • Marvasti, M. B., Sadeghi, S. K., & Karbor, R. (2014). new evidence on the link between income inequality and misery index: A nonlinear time series analysis. International Journal of Sustainable Development & World Policy, 3(1), 25–30.

    Google Scholar 

  • Mazur, J. (2000). Labour’s new internationalism. Foreign Affairs, 79, 79.

    Article  Google Scholar 

  • Mustafa, S. A. (2016). The effective strategies in companies’ performance using the partial least squares approach. International Journal of Economics, Business and Management Studies, 3(2), 94–101.

    Google Scholar 

  • Ng, E. K., & Chan, J. C. (2012). Geophysical applications of partial wavelet coherence and multiple wavelet coherence. Journal of Atmospheric and Oceanic Technology, 29(12), 1845–1853.

    Article  Google Scholar 

  • Onodugo Vincent, A., & Nwoji Stanley, C. (2013). Widening the breadth of knowledge diffusion among Nigerian employees: The upsides of globalization. International Journal of Management and Sustainability, 2(6), 113–126.

    Article  Google Scholar 

  • Ramsey, J. B., & Zhang, Z. (1996). The application of wave form dictionaries to stock market index data. In Y. A. Kravtsov & J. B. Kadtke (Eds.), Predictability of complex dynamical systems (pp. 189–205). Berlin: Springer.

    Chapter  Google Scholar 

  • Sa’idu, B. M. (2014). Poverty, inequality and millennium development goals’ expenditure: A probabilistic linkage. International Journal of Management and Sustainability, 3(11), 653–663.

    Article  Google Scholar 

  • Sabi, M. (2007). Globalization and human development. In International conference on globalization and its discontents, Cortland, The Sage Colleges, USA.

  • Samy, Y., & Daudelin, J. (2013). Globalization and inequality: Insights from municipal level data in Brazil. Indian Growth and Development Review, 6(1), 128–147.

    Article  Google Scholar 

  • Sbaouelgi, J. (2017). Income inequality and economic growth: Application of quantile regression. Asian Development Policy Review, 6(1), 1–14.

    Article  Google Scholar 

  • Sbia, R., Shahbaz, M., & Hamdi, H. (2014). A contribution of foreign direct investment, clean energy, trade openness, carbon emissions and economic growth to energy demand in UAE. Economic Modelling, 36, 191–197.

    Article  Google Scholar 

  • Schultz, T. P. (1998). Inequality in the distribution of personal Income in the world: changing and why. Journal of Population Economics, 11(3): 307–344.

    Article  Google Scholar 

  • Shahbaz, M., Lahiani, A., Abosedra, S., & Hammoudeh, S. (2018). The role of globalization in energy consumption: A quantile cointegrating regression approach. Energy Economics, 71, 161–170.

    Article  Google Scholar 

  • Shahbaz, M., Tiwari, A. K., & Tahir, M. I. (2015). Analyzing time–frequency relationship between oil price and exchange rate in Pakistan through wavelets. Journal of Applied Statistics, 42(4), 690–704.

    Article  Google Scholar 

  • Sharif, A., Afshan, S., & Qureshi, M. A. (2019). Idolization and ramification between globalization and ecological footprint: Evidence from quantile-on-quantile approach. Environmental Science and Pollution Research. https://doi.org/10.1007/s11356-019-04351-7. (In Press).

    Article  Google Scholar 

  • Sheykhi, M. T. (2016). Rural–urban balance as a measure of socio-economic development with special reference to Iran. Journal of Social Economics Research, 3(1), 1–12.

    Article  Google Scholar 

  • Singh, A. (2012). Financial globalization and human development. Journal of Human Development and Capabilities, 13(1), 135–151.

    Article  Google Scholar 

  • Stiglitz, J. (2016). Globalization and its new discontents. Project Syndicate, 5(8), 2–3.

    Google Scholar 

  • Taguchi, H., & Li, J. (2018). Domestic value creation in the involvement in global value chains: The case of Chinese economy. Asian Development Policy Review, 6(3), 155–168.

    Article  Google Scholar 

  • Tirtosudarmo, R. (2009). Mobility and human development in Indonesia.

  • Tiwari, A. K., Bhanja, N., Dar, A. B., & Islam, F. (2015a). Time–frequency relationship between share prices and exchange rates in India: Evidence from continuous wavelets. Empirical Economics, 48(2), 699–714.

    Article  Google Scholar 

  • Tiwari, A. K., Dar, A. B., Bhanja, N., Arouri, M., & Teulon, F. (2015b). Stock returns and inflation in Pakistan. Economic Modelling, 47, 23–31.

    Article  Google Scholar 

  • Torrence, C., & Compo, G. P. (1998). A practical guide to wavelet analysis. Bulletin of the American Meteorological Society, 79(1), 61–78.

    Article  Google Scholar 

  • Torrence, C., & Webster, P. J. (1999). Interdecadal changes in the ENSO–monsoon system. Journal of Climate, 12(8), 2679–2690.

    Article  Google Scholar 

  • Troster, V., Shahbaz, M., & Uddin, G. S. (2018). Renewable energy, oil prices, and economic activity: A Granger-causality in quantiles analysis. Energy Economics, 70, 440–452.

    Article  Google Scholar 

  • Tsai, P. (1995). Foreign direct investment and income inequality: Further evidence. World Development, 23(3), 469–483.

    Article  Google Scholar 

  • Wan, G. (2007). Understanding regional poverty and inequality trends in China: Methodological issues and empirical findings. Review of Income and Wealth, 53(1), 25–34.

    Article  Google Scholar 

  • Wicaksono, E., Amir, H., & Nugroho, A. (2017). The sources of income inequality in Indonesia: A regression-based inequality decomposition (No. 667). ADBI working paper series.

  • Wood, A. (2002). Globalization and wage inequalities: A synthesis of three theories. Weltwirtschaftliches Archiv, 138(1), 54–82.

    Article  Google Scholar 

  • Wu, T. P., & Wu, H. C. (2019). A multiple and partial wavelet analysis of the economic policy uncertainty and tourism nexus in BRIC. Current Issues in Tourism. https://doi.org/10.1080/13683500.2019.1566302.

    Article  Google Scholar 

  • Zhang, W. B. (2018). Inequality and education subsidies in general equilibrium growth model for a small open economy. Asian Journal of Economic Modelling, 6(2), 172–190.

    Article  Google Scholar 

  • Zhong, X., Nichols Clark, T., & Sassen, S. (2007). Globalization, producer services and income inequality across US metro areas. International Review of Sociology—Revue Internationale de Sociologie, 17(3), 385–391.

    Google Scholar 

  • Zhu, C., & Chen, L. (2018). An analysis of the development of China’s Commercial banks under the structural reform of the supply side. Journal of Accounting, Business and Finance Research, 4(1), 1–8.

    Article  Google Scholar 

  • Zhu, S. C., & Trefler, D. (2005). Trade and inequality in developing countries: A general equilibrium analysis. Journal of International Economics, 65(1), 21–48.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Taylors Business School (TBS), Taylors University Lakeside Campus, 1 Jalan Taylors, Subang Jaya, Malaysia

    Muhammad Haseeb

  2. Faculty of Islamic Economics and Business, The State Islamic Institute of Raden Intan Lampung, Bandar Lampung, Indonesia

    Tulus Suryanto

  3. School of Postgraduate Studies, Management and Science University (MSU), 40100, Shah Alam, selangor, Malaysia

    Nira Hariyatie Hartani

  4. Department for Management of Science and Technology Development, Ton Duc Thang University, Ho Chi Minh City, Vietnam

    Kittisak Jermsittiparsert

  5. Faculty of Social Sciences and Humanities, Ton Duc Thang University, Ho Chi Minh City, Vietnam

    Kittisak Jermsittiparsert

Authors
  1. Muhammad Haseeb
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Tulus Suryanto
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Nira Hariyatie Hartani
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Kittisak Jermsittiparsert
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Kittisak Jermsittiparsert.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Haseeb, M., Suryanto, T., Hartani, N.H. et al. Nexus Between Globalization, Income Inequality and Human Development in Indonesian Economy: Evidence from Application of Partial and Multiple Wavelet Coherence. Soc Indic Res 147, 723–745 (2020). https://doi.org/10.1007/s11205-019-02178-w

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11205-019-02178-w

Keywords

Search

Navigation