The impact of globalization on the development of wood utilization

Abstract

The socio-economic development of a global economy affects all economic sectors, including forest-based industries. Forest-based industries have undergone key changes in recent years, largely because of new policies and strategies in environmental and ecological economics, global challenges, innovations and technologies, new markets and new natural conditions due to climate change. Globalization significantly influences the shift from traditional renewable resource use to newer, greener and more efficient technologies. The main aim of the study is to evaluate the impacts of globalization on wood utilization represented by timber trade. Although the results were obtained at the national level, for the Slovakian wood industry and export activity, the methodology and approach used can serve as a model for various national economies. The research applies the KOF Globalization Index to analyze the impact of globalization on the development of foreign trade and the conditions of the timber market. The relationship between the KOF Globalization Index and timber trade is identified by the econometric models. To reveal the interconnection between the foreign timber trade and the development of the KOF Globalization Index, the linear regression models are applied for inference and prediction. The study results indicated that globalization has a stronger impact on exports than on imports of industrial roundwood. The model explains the behaviour of roundwood exports at an average of 76% and in the case of imports, this rate decreases to 66%. Overall, this can be viewed as a negative impact on the domestic economy, as roundwood timber is considered an intermediate product, and could be consumed and processed in domestic conditions before being exported as a higher-value wood product. Moreover, the results confirmed significant differences between the coniferous and non-coniferous industrial roundwood markets. The investigations indicate that in the case of exports, lower-quality assortments of non-coniferous industrial roundwood are exported from Slovakia. On the other hand, more valuable assortments are exported in the case of coniferous industrial roundwood.