The impact of financial globalization on the economic growth of countries: A case for Ukraine
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Author(s)Oksana HrubliakLink to ORCID Index: https://orcid.org/0000-0002-7198-9747
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Artur ZhavoronokLink to ORCID Index: https://orcid.org/0000-0001-9274-8240
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Olha PopeloLink to ORCID Index: https://orcid.org/0000-0002-4581-5129
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Violetta KharabaraLink to ORCID Index: https://orcid.org/0000-0002-8555-6440
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Maksym DubynaLink to ORCID Index: https://orcid.org/0000-0002-5305-7815
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Inna LopashchukLink to ORCID Index: https://orcid.org/0000-0001-9934-6607
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DOIhttp://dx.doi.org/10.21511/imfi.22(4).2025.17
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Article InfoVolume 22 2025, Issue #4, pp. 209-226
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Creative Commons Attribution 4.0 International License
Type of the article: Research Article
Abstract
Financial globalization promotes investment inflows, financial market development, and deeper integration into the international economic system, yet its impact on economic growth remains ambiguous. The study aims to identify and quantify the influence of key financial globalization factors – direct and portfolio investments, external debt, and international reserves – on the economic growth of selected countries, with a focus on Ukraine’s integration into the global financial space. Statistical analysis was employed to summarize financial globalization indicators, correlation analysis to assess the strength and direction of relationships between these factors and GDP growth, regression modeling to estimate the impact of each factor on economic performance, and comparative analysis to contrast Ukraine’s trends with those of European countries. The results revealed that in developed economies (Germany, the UK), high FDI levels (5-8% of GDP) and stable reserves (over 25% of imports) support sustainable growth. In transition economies (Poland, Romania), financial globalization contributes to modernization but increases volatility due to reliance on external investors. For Ukraine, the impact remains limited: FDI averaged 3-4% of GDP, external debt exceeded 80% of GDP, and international reserves fluctuated around USD 25-30 billion, insufficient for long-term macroeconomic stability. Correlation between FDI and GDP (r = 0.62) indicates a moderate positive link, while portfolio investment showed a weak and unstable connection (r = 0.28). Overall, financial globalization offers opportunities for capital inflows and technological transfer, but its benefits for Ukraine depend on strengthening institutional capacity, financial resilience, and a predictable regulatory environment to ensure it serves as a driver of sustainable development rather than a source of risk.
Acknowledgment
This research is carried out within the framework of the scientific project “Model of the post-war development of credit institutions based on artificial intelligence: customization of financial services and prudent supervision” with the support of the Ministry of Education and Science of Ukraine, State registration No. 0124u000810 (Order No. 1569 dated December 27, 2023).
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JEL Classification (Paper profile tab)F32, F36, F43, H 63, O10
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References62
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Tables1
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Figures6
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- Figure 1. Research methodology
- Figure 2. KOF Financial Globalization Index (FGI) dynamics, units
- Figure 3. Dynamics of the direct foreign investment (FDI, net inflows), USD billion
- Figure 4. Dynamics of portfolio investments (EFPI, net inflows), USD million
- Figure 5. Dynamics of external debt of countries (external debt, ED), USD billion
- Figure 6. Dynamics of international currency reserves (foreign exchange reserves), USD billion
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- Table 1. Variables, measurements, and data sources
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