Consumption Risk Sharing in East Asia and Economic, Social, and Political Globalization

Abstract

This study investigates the relationship between economic, social, and political globalization and consumption risk sharing in East Asia by utilizing the 2019 version of the KOF globalization indices. To this end, this study uses the Association of Southeast Asian Nations and the Eurozone as comparison regions. Findings show that economic and social globalization contributed to the improvements in consumption risk sharing among East Asian countries in 1970–2017, but political globalization did not. This result implies that the collapse of economic and social networks resulting from the COVID-19 pandemic might have a negative effect on consumption risk sharing in East Asia. Differences in the effects between de facto and de jure globalization on risk sharing and changes in the effect of globalization on risk sharing before and after the 1997–1998 Asian financial crisis are also discussed.