Pakistan’s Digital Transformation and Edge in Service Exports

PurposeThe aims of the paper are to investigate IT software and service export function for India. First, cointegration tests have been used to investigate the long-run equilibrium relationship of the given variables. Second, long-run coefficients and associated error correction mechanism are estimated.Design/methodology/approachAnnual time series data on IT software and service exports, human capital, exchange rate, investment in IT, external demand and openness index have been used for the present study during the period 1980–2017. The data are collected from the National Association of Software and Service Companies (NASSCOM), Planning Commission of India, University Grants Commission (UGC) of India, real effective exchange rate (REER) database and World Bank development indicators. Auto regressive distributed lag (ARDL) model is used to analyze both short-run and long-run dynamic behaviour of economic variables with appropriate asymptotic inferences.FindingsResults of the analysis show the stable long-run equilibrium relationship among the given variables. It is found that external demand, exchange rate, human capital and openness index have a substantial long-run impact on the IT software and service exports. We also found that the coefficient of error correction term is negative and significant at 1% of the level of significance, which confirms the existence of stable long-run relationship which means adjustment will take place when there is a short-run deviation to its long-run equilibrium after a shock.Research limitations/implicationsThere may be other determinants of software and service exports apart from those considered by the present study. Due to the non-availability of data, the study considers only important determinants that determine the software and service exports in India. The IT exports are an emerging and dynamic field of economic activity and the rate of change is so rapid that the relevance of individual factors may change over time. The study period is also limited to available data.Practical implicationsThe paper has implications for achieving sustainability in IT software and service exports growth. It is recommended that policies directed at improving the performance of IT software and service exports should largely consider the long-run behaviour of these variables.Originality/valueThis paper focuses on originality in the analysis of the relationship among the given variables including IT software and service exports, human capital, exchange rate, investment in IT, external demand and openness index in India. All the work has been done in original by the authors, and the work used has been acknowledged properly.

Background: ICT exports play a crucial role as drivers of innovation, efficiency, and productivity, ultimately shaping the patterns of economic growth. Hence, this study investigates the asymmetrical effect of ICT service exports on Pakistan's economic growth. Several researchers have investigated the asymmetric effect of ICT on economic growth; however, the studies have not been country-specific, particularly in Pakistan. Existing literature tends to address these factors in more general, regional, or global settings but overlooks Pakistan's specific economic form, policy landscape, and digital transformation challenges. Methodology: This study employed the NARDL model to decompose ICT service exports into their positive and negative effects on growth, considering commercial service exports and the real effective exchange rate. Results: The study’s findings from NARDL have confirmed that there are substantial long-term asymmetry effects of ICT export declines, producing more significant negative impacts on growth than positive effects. The speed at which GDP adjusts to fluctuations in ICT service exports during the short-term period exhibits both positive and negative effects. The research suggests that maintaining stable ICT exports is crucial for achieving long-term, sustainable economic growth. Conclusion: The government must implement measures to combat declining ICT service exports through digital market expansion and technology upgrades, while acknowledging that temporary trade shifts have no immediate impact. This study makes valuable contributions to the understanding of asymmetric economic growth responses to ICT trade activities, thereby generating knowledge for sustainable development policies in digital economies. Originality Value: This research uses an NARDL method to investigate ICT service export differences on economic growth in Pakistan while separating positive and negative shocks through country-specific data from 1990 to 2024. It also includes commercial exports and REER, which offer contemporary, policy-relevant insights for Pakistan's digital economy.

<p><em>This paper assesses the relationship between the Internet and international trade in services. While there are similarities and discriminating differences between trade in services and goods, it is widely believed that the recent rapid internet penetration has benefitted trade in services more than trade in goods. The study carries out an empirical assessment of the contribution of the internet to services export and import for a total of 63 developed and developing countries over the period of 2000-2014. As most explanatory variables are likely to be jointly endogenous with services export and import, we run GMM regressions developed for dynamic panel data. </em><em></em></p><p><em>Our results are, in general, consistent with the previous findings that growth in internet users and GDP as well as measures of trade openness all has positive impact on services export and import. For instance, a</em><em> </em><em>1% increase in internet users in the partner countries leads to 0.27% and 0.08% increase in services export and import, respectively, in the combined group of reporting countries. </em><em>The impact of </em><em>internet on services export appear larger for developed countries, 0.52%, and insignificant for developing countries. The estimated coefficients of population appear significant while carry unexpected signs. Finally, the real effective exchange rate is significant for the services import only</em><em>. </em><em></em></p>

The services sector plays a crucial role in Pakistan's economy based on its contribution to GDP and the engagement of most of the labour force with this sector. Services exports provide valuable foreign exchange earnings, and the focus on promoting services exports can resolve the balance of trade issue. Hence, this study investigates the key determinants influencing Pakistan's services exports with its major trading partners. The study employed an extended gravity model through fixed effect, random effect and Poisson-Pseudo Maximum Likelihood (PPML) methods by using data from 2000-2022 and found out that the GDP of the partner country, FDI, employment in services, logistics performance index (LPI), and services trade restrictiveness index (STRI) are important determinants of services exports in Pakistan. Pakistan is the most restrictive economy in the South Asian region which has higher STRI, resultantly the restrictions are negatively affecting the services trade and exports of the country. Moreover, the study evaluated that the USA, UAE, China, and UK are major export markets for export services of Pakistan. Based on these findings, the study suggests that Pakistan should improve its logistics infrastructure and reduce service trade restrictions to boost services exports.

This paper investigates the impact of foreign direct investment (FDI) on the performance of companies in low- and high-technologically intensive industries in the manufacturing sector in EU member countries, using datasets covering the period between 2010 and 2020. The industries were selected according to the EU High-tech classification of manufacturing industries based on NACE Rev.2 at 2-digit codes. The performance of companies in our study was measured based on turnover. We used a set of independent variables, such as inward and outward FDI stocks, imports and exports of goods and services, gross domestic product (GDP) at market prices, real effective exchange rate, gross domestic expenditure on research and development, and gross fixed capital formation. On applying the panel data methodology, our findings indicated that inward FDI stocks, imports of goods and services, and real effective exchange rates have a significant impact on the performance of companies in high-technologically intensive industries. For low-tech companies, exports of goods and services are important driving factors behind their performance.
 Keywords: high-tech industries, low-tech industries, foreign direct investment, performance, European Union

Elite planners in the Eastern Caribbean sub-region pin their hopes of economic viability on tourism, a vibrant offshore financial (and other) services sector and an increase in export activity from companies operating out of industrial parks. Framed against the perception of an inevitable globalisation process underway, with limitations posed to high-level or diversified manufacturing, power holders have sought to concentrate on the promotion of 'export services' as a viable cover against new competitive challenges. This article argues, however, that this state of affairs betrays a crisis-of-mission within the ruling class on how to reconstruct political economies marked by the hegemony of merchant capital. Rather than a move towards what are globally the most remunerative factors of production--high-level manufacturing and services--a rather curious consensus has emerged which proclaims a solid future for export services without roots and/or ganglia to local manufacturing. The success of such an 'export services' model anywhere in the Eastern Caribbean will not turn as much on the quality of human resources as it will on overcoming the short-term horizon of local politicians, and the low-risk predilections of the wealthy planter-merchant elite. The latter's conscious 'opt out' strategy on the question of manufacturing diversity has made for a strikingly conservative enterprise culture. More specifically, merchant capitalist societies like those in the Eastern Caribbean insufficiently display the sociocultural attributes required for the creation of high-level services: innovation-mediated risk, research and development competence, and affinities to industrial processes and networks.

As digitalization in the agricultural sector has intensified, the number of studies addressing adoption and use of digital technologies in crop production and livestock farming has also increased. However, digitalization trends in the context of small-scale farming have mainly been excluded from such studies. The focus of this paper is on investigating the sequential adoption of precision agriculture (PA) and other digital technologies, and the use of multiple technologies in a small-scale agricultural region in southern Germany. An online survey of farmers yielded a total of 2,390 observations, of which 1,820 operate in field farming, and 1,376 were livestock farmers. A heuristic approach was deployed to identify adoption patterns. Probable multiple uses of 30 digital farming technologies and decision-support applications, as well as potential trends of sequential technology adoption were analyzed for four sequential points of adoption (entry technology, currently used technologies, and planned short-term and mid-term investments). Results show that Bavarian farmers cannot be described as exceedingly digitalized but show potential adoption rates of 15–20% within the next five years for technologies such as barn robotics, section control, variable-rate applications, and maps from satellite data. Established use of entry technologies (e.g., automatic milking systems, digital field records, automatic steering systems) increased the probability of adoption of additional technologies. Among the most used technologies, the current focus is on user-friendly automation solutions that reduce farmers’ workload. Identifying current equipment and technology trends in small-scale agriculture is essential to strengthen policy efforts to promote digitalization.

Purpose – The information technology (IT) sector in India is the leading exporter from the service sector domain and also is a significant contributor to the overall export kitty of India. The IT sector’s contribution in total Indian exports (merchandise plus services) increased from less than 4 percent in FY1998-1999 to about 25 percent in FY2011-2012 as per IT industry nodal body National Association of Software and Services Companies and the central bank of the country, the Reserve Bank of India (RBI). As this industry earns most of its revenue in foreign currencies it is exposed to the foreign exchange risks. The purpose of this paper is to validate the macro-economic theory that depreciation in domestic currency boosts export as it makes domestic good and services cheaper and appreciation in domestic currency deters export as it makes domestic good and services costlier. The authors are validating this theory for Indian rupee and keeping software services export in the focus. Design/methodology/approach – In this study the authors have done the multiple regression analysis on the obtained time-series data. The research was totally based on the secondary data from Quarter1 (April-June) of FY 2000-2001 to Quarter4 (January-March) of FY 2011-2012. It comprises of data for 48 consecutive quarters. The authors have taken the growth rate, so the final data set consist of data of 47 quarters. The main source of data are published data by RBI. Data have been collected for export of software services, merchandise export, real effective exchange rate, US-dollar-Indian rupee exchange rate, gross domestic product of India and selected countries. Findings – Data analysis leads the authors to the following findings: real effective exchange rate has no significant impact on software services export; US-dollar-Indian rupee exchange rate has no significant impact on software services export; external gross domestic product growth has no significant impact on software services export; and gross domestic product growth of India has no significant impact on software services export. The results obtained from multiple regression analysis are also supported by the results obtained from Granger Causality test. It does not identify any single factor as a major cause of software export. Results shows that the external GDP is having the statistically significant impact on the software export but the low value of R2 denotes that the impact is very low. Originality/value – There are no published studies available which has attempted similar kind of an approach to study using aggregated export data and other macro-economic variables like real effective exchange rate (REER) and GDP growth rate. All previous literatures used REER to measure the impact of the exchange rate on export.

The real effective exchange rate (REER) is the most commonly used measure for assessing international competitiveness. We develop a methodology to estimate the REER that incorporates two distinctive elements that are not considered in the current literature and apply it to the Mediterranean Quartet (MQ) of Greece, Italy, Portugal, and Spain, whose common pattern of real appreciation has created concern in policy and academic circles. The two elements that we add to the existing literature are (i) product heterogeneity when identifying each country's international competitors and their weights and (ii) a comprehensive treatment of services exports. Our refined measure suggests a modest reduction in the observed REER gap between the MQ countries and the other euro area countries. In particular, considering product heterogeneity and services exports implies a lower real appreciation from 1998 to 2006 on the order of 2-3 percent for all MQ countries. These are difference-in-difference estimates relative to the results obtained for the rest of the euro area countries using the same methodology.

The real effective exchange rate (REER) is the most commonly used measure for assessing international competitiveness. This paper develops a methodology to estimate the REER that incorporates two distinctive elements that are not considered in the current literature and applies it to the Mediterranean quartet (MQ) of Greece, Italy, Portugal, and Spain, whose common pattern of real appreciation has created concern in policy and academic circles. The two elements that this paper adds to the existing literature are (1) product heterogeneity when identifying each country's international competitors and their weights, and (2) a comprehensive treatment of services exports. Our refined measure suggests a modest reduction in the observed REER gap between the MQ countries and the other euro area countries. In particular, considering product heterogeneity and services exports implies a lower real appreciation from 1998 to 2006 on the order of 2 to 3 percent for all MQ countries. These are difference-in-difference estimates relative to the results obtained for the rest of the euro area countries using the same methodology.

The real effective exchange rate (REER) is the most commonly used measure for assessing international competitiveness. We develop a methodology to estimate the REER that incorporates two distinctive elements that are not considered in the current literature and apply it to the Mediterranean Quartet (MQ) of Greece, Italy, Portugal, and Spain, whose common pattern of real appreciation has created concern in policy and academic circles. The two elements that we add to the existing literature are (i) product heterogeneity when identifying each country's international competitors and their weights and (ii) a comprehensive treatment of services exports. Our refined measure suggests a modest reduction in the observed REER gap between the MQ countries and the other euro area countries. In particular, considering product heterogeneity and services exports implies a lower real appreciation from 1998 to 2006 on the order of 2-3 percent for all MQ countries. These are difference-in-difference estimates relative to the results obtained for the rest of the euro area countries using the same methodology.

ICT intensive services were found to contribute to the service export growth in developed countries. However, empirical work on the role of ICT in ASEAN’s services export is sparse due mainly to the scarcity of bilateral services trade data. This study uses mirror data from the ASEAN-5’s trading partners from 2000 to 2012 for examining the impact of ICT on the ASEAN-5’s services export. A set of constructed ICT indicators are found to have significant positive network effect on the ASEAN-5’s services export. Thus, the higher the ICT development level in both trading partner countries, the higher their bilateral services exports with each other. But, the positive impact of ICT on the ASEAN-5’s trade in services can be offset by the presence of trade costs. Therefore, policies enhancing trade facilitation should be used in tandem with the development of ICT in order to promote the ASEAN-5’s services export.

The study evaluates the consequence of persistent hikes in interest rate on price stability in Nigeria. It uses data on major economic parameters such as inflation, real effective exchange rate, GDP growth rate, real interest rate, currency in circulation, lending rate from 1990 to 2023. Inflation is the endogenous variable. Independent indicators are the growth rate of GDP, real interest rate, real effective exchange rate, currency in circulation, and lending rate. The parameters are stationary at levels and first difference which warranted the use of Autoregressive Distributed Lag model (ARDL) bounds test, and Error Correction Model to evaluate the variables. In the short and long run. VAR lag order selection criteria were used to determine the lag length for each variable. Findings show that the growth rate of GDP and real interest rate have a negative effect on inflation in the long run. Further, lending rate, and real interest rate, currency in circulation, real effective exchange rate, have positive impact on inflation in the long run. In terms of granger causality, the research also shows the existence of bi-directional movement from lending rate to inflation and vice versa. There is also the existence of unidirectional movement from inflation to lending rate, real effective exchange rate, and real interest rate. There is also a unidirectional movement from currency in circulation to lending rate. The findings of the study will help the financial and fiscal authorities in Nigeria to know the implications of persistent interest rate hikes on price stability.

Fluctuation of tea export earnings affects the profitability of firms in the sector and therefore farmers’ earnings (bonus). To this end, there is dire need for stabilizing the earnings to farmers hence need to know the key factors which could be targets for policy and hence the need for this study. The dependent variable was tea export earning while the independent variables were real exchange rate, foreign income and inflation. To enhance accuracy and credibility of this study, control variables used include unit prices of tea, agriculture value added as well as export of goods and services. The specific objectives included exploring the effect of real exchange rate on tea export earnings; the effect of inflation rate, and establishing the effect of foreign income of major trading partners on tea export earnings. Various regression methods are used to test the research hypothesis, including unit root tests, co integration, and error correction model. The long run and short run analysis of these variables is taken to account. Findings ascertain that indeed the model gives a good description of the variables. Foreign income has an indirect relationship with tea export earnings. On the other hand, they are all significant except inflation. There is a direct relationship between tea export earnings and real exchange rate, tea price, export of goods and services, and agriculture value addition. The study recommends tea exporters to hedge against foreign exchange risk through derivative markets. It encourages stakeholders to engage in marketing and value addition. Value addition is a sustainable solution to ensure stability of earnings from tea exports in the country. Finally, strong monetary policies are recommended to enhance price stability and tea export earnings. This is because such policies should curb the problem of extensive volatility of inflation and exchange rates.

India's prowess in the service sector has been recognised the world over. Sustaining services exports is important not only to sustain India's high growth rate but also to compensate for a consistent deficit in merchandise trade and to maintain stability on the external sector. In this context, we analyse the factors of India's performance in services exports over the past three decades. The results reveal that endowment factors such as human capital, improvement in physical infrastructure and financial development are key drivers for India's surge in services exports along with world demand, exchange rate and manufacturing exports. While factors such as institutions, R&D expenditure, telecommunication, foreign direct investment and financial development significantly impact the export of modern services, traditional services exports are more dependent on infrastructure development, manufacturing exports, world demand and exchange rate. India's economic reforms in the financial sector, FDI, communication so far have helped the services exports, but India needs to focus on supply‐side factors to improve the competitiveness – and thereby volume – of services exports.