Role of trade openness in moderating the effects of broadband penetration on technological catch-up: the case of emerging market economies

This study examines the relationship between foreign direct investment (FDI) inflow, trade openness, and the influence of FDI on economic growth. The threshold methodology and GMM estimation are employed to analyze panel data from 60 developing countries in the period between 1995 and 2019. This study demonstrates the positive impact of FDI on economic growth in developing countries. However, the study also finds a significant threshold of FDI inflow relative to GDP that changes the impact of inward FDI on GDP growth. Regarding the role of trade openness, a significant threshold is found, which also indicates the absorptive capacity of the host countries. Moving from below to above this threshold, an increase in FDI inflow leads to a lower increase in economic growth. An increase in FDI relative to GDP stimulates growth only when the host country has sufficient absorptive capacity with regard to trade openness above the threshold. We suggest developing countries tighten the coherence of trade liberalization and FDI attraction policies to obtain the benefits of FDI and make changes to attract new investors when they succeed in attracting massive FDI inflows.

PurposeWith the fierce competition in a knowledge economy, knowledge-intensive enterprises (KIEs) make technological progress in their catching-up processes through implementing product innovation and process innovation. In this study, the aim is to understand the determinants of enterprise innovation type in China's catch-up environment. Further, this paper intends to deal with two related questions. First, what effect does the internal knowledge base have on KIEs' technology innovation activities? Second, considering the technology gap and technology development speed, what are the different impacts of the knowledge base on the type of technology innovation activities?Design/methodology/approachThis paper collected data from 212 KIEs in China through a two-stage questionnaire survey, combined with statistical data for research. The hypothesis was tested by regression analysis. Specifically, descriptive statistics and regression analysis are introduced to test the hypothetical relationship between the knowledge base and technology innovation. Meanwhile, multiple regression is used to test whether there is any difference in the influence of technology gap and technology development speed on enterprise knowledge base and technology innovation. Finally, the corresponding robustness tests are done.FindingsThis study finds that in a sample of Yangtze River Delta KIEs, firms' knowledge base influences innovation types. Specifically, the knowledge base width (KBW) and knowledge base depth (KBD) positively influence process innovation, and KBD positively affects product innovation. Regarding the effects of catch-up context factors on KIEs’ innovation choice, a wide technology gap tends to positively influence product innovation in industries with high levels of KBW. Moreover, when technology development speed is high, its potential positive influence on process innovation will be more significant for industries with deeper knowledge bases.Originality/valueThis paper fills the research gap that existing studies ignore the relationship between types of technology innovation and knowledge base dimensions, especially for KIEs. First, this paper deepens the understanding of the impact mechanism of KIEs' existing knowledge base on innovation activities; the unique use of resources by enterprises is the basis of enterprises' competitive advantage and will become enterprises' competitive advantage. Second, this study indicates that against different backdrops of technology gap and technology development speed, enterprises with different knowledge bases will adopt different types of technology innovation activities. Third, this paper shows that a wider technology gap provides broader innovation space, so the technology gap plays a pulling role in KBW and product innovation, thus pushing forward enterprises' technological catch-up.

PurposeThe aim of this research is to investigate the causal relationship between trade openness (TO) and life expectancy (LE) at birth in Latin American countries over the period of 1980–2014.Design/methodology/approachThe bootstrap panel Granger causality test proposed by Emirmahmutoglu and Kose (2011) was used to determine the direction of causality in the presence of cross-sectional dependency and heterogeneity among Latin American countries. Also, four different tests were employed in order to determine the cross-sectional dependency and slope homogeneity. The stationarity properties of variables were inspected by employing a unit root test.FindingsThe findings indicated that Granger causality existed between TO and LE, at birth which was running from the former to the latter for panel. On a country basis, TO Granger caused LE at birth for countries with low level of economic development and higher taxes on income and profits.Practical implicationsThis study provides new insights for policymaking regarding the role of TO in achieving comprehensive economic reforms to increase LE at birth during a period of intense trade rivalry across nations.Originality/valueAlthough research in the literature has mainly focused on the impact of TO on LE at birth with panel data, most studies ignored the regional effects. It is the authors’ concern that the direction of causality can be country-specific and have regional characteristics. In this regard, instead of dividing countries for a specific region into two parts such as developing and developed, the authors investigated the pattern of trade–health link for a specific region, Latin America.

There are various schools of thought regarding the relationship between the environment and economy. Ecological modernization argues that the harmful effects of economic growth and development on the environment decline through time, whereas the treadmill of production and ecologically unequal exchange postulate different perspectives. This study relies on World Bank and World Resources Institute data for the period of 1965–2010. Time‐series cross‐sectional Prais‐Winsten (PW) regression models with panel‐corrected standard errors (PCSE) are employed to examine whether economic growth and trade openness intensified or decoupled in relation to three measures of carbon dioxide (CO2) emissions during this period. The findings of this study indicate that there has been a “tilt” in the treadmill of production—that is, the most environmentally degrading production processes have moved to less developed countries. Furthermore, integration into the world economy has been associated with an intensification in CO2 emissions for less developed countries. Surprisingly, however, this phenomenon does not seem to be driven by exports sent to high‐income nations, suggesting that there are mechanisms embodied within the global organization of production that require further exploration.

Do domestic innovations promote trade openness? Empirical evidence from emerging economies

How is mobile broadband intensity affecting CO2 emissions? – A macro analysis

The aim of the paper is to investigate the effect of a new international estimate of human capital on the process of innovation and technology catch-up in developed countries. The new human capital variable is a measure of average human capital efficiency per hour worked that considers the role of both the quantity and quality of education. Our methodology is based on the framework proposed by Jess Benhabib and Mark A. Spiegel (2005) that uses a logistic function of technology diffusion. The analysis employs panel econometrics and tackles the endogeneity bias. Empirical results show robust evidence of the significance of this human capital variable as a driver of innovation and diffusion. The effects of cognitive skills on technological progress are higher the closer the economies are to the technology frontier. Furthermore, as technological progress has been measured using the improved total factor productivity (TFP) variables built in Penn World Table (PWT) 8.0, we confirm the existence of social returns to human capital.

This study aims to analyze the effect of service sector, inflation, and trade openness on indirect tax revenue in a number of countries in Latin America and the Caribbean. The results of this study are expected to provide additional insight into the knowledge of the factors that influence indirect tax revenue as well as the moderating effect of trade openness on the influence of the service sector and inflation in influencing indirect tax revenue in the region. This study uses secondary data on 15 countries with a period of 2009-2019. The analysis model used is multiple linear regression for panel data with panel-corrected standard errors. The results show that there is a significant effect of all independent and moderation variables on indirect tax revenue. Individually, the service sector has a negative effect on indirect tax revenue. However, after being moderated, the effect is weakened. Inflation also negatively affects indirect tax revenue, but this effect cannot be moderated by trade openness. Meanwhile, trade openness partially has a positive effect on indirect tax revenue. It is recommended that the government make policies that encourage trade openness because it has a positive impact on the economy, especially in the field of taxation.

The long run trade orientation of an economy is measured in this article by an index which measures the extent to which the real exchange rate is distorted away from its free trade level by the trade regime. The technique for estimating a cross country index of real exchange rate distortion uses the international comparison of prices prepared by Robert Summers and Alan Heston. Resource endowment constitutes the norm and real overvaluation or undervaluation relative to this norm reveals whether incentives are directed to the domestic or international market. The index is constructed based on data for GDP/capita average price level in US dollars 1976-85 and GDP growth rate/capita 1976-85. Other sections are devoted the comparison of the procedure for 117 countries between 1976-85 and an examination of the empirical relationship between outward orientation and economic growth and sensitivity analysis. The results indicate that Latin America generally was overvalued by 33% relative to Asia and Africa was overvalued by 86%. The real exchange rate distortion index supports the view that Asian countries are more outward oriented. Asian economies have lower price levels which reflect relatively modest protection and incentives oriented to external markets. Latin American countries with moderately high price level and African countries with very high price levels reflect strong protection and incentives directed to production for the domestic market. An alternative specification which eliminates the dummy variables for Africa yields similar results with slightly lower magnitude; i.e. overvaluation is 60% instead of 86% for Africa and Latin America is overvalued by 39% instead of 33% over Asia. A table is provided which indicates by country the distortion and variability of the real exchange rate the GDP growth the 1976 GDP/capita and the investment rate. Another finding was that there is a significant negative relationship between distortion of the real exchange rate and growth of GDP/capita after controlling for the effects of real exchange rate variability and investment level with both the original specification and the alternative. The growth rate/capita of Latin American and African countries would increase 1.5-2.1% with a shift to move outward oriented trade policies. This gain as well as devaluation of the real exchange reate trade liberalization and maintenance of a stable real exchange rate would contribute to positive growth rates. In the analysis of the poorest 24 countries the result was that only rate distortion and not variability and investment rate explained the growth rate. The gain for Ghana for example of adopting the trade policies and exchange rate of Bangladesh would be 5% to its growth.

The study used panel data from 1998 to 2014 among 48 different countries to determine the relationship between foreign direct investment and corruption. For identifying the relationship, the study employed random effect model (REM), feasible general least squares method (FGLS) and panels corrected standard errors (PCSE). The results of the three panel estimation methods reveal that the variable of corruption is statistically significant at 1%, but negative relations between corruption and FDI results were determine by using REM, FGLS and PCSE estimation methods in three different regions (South and South-East Asia, Latin America, the Caribbean and Africa). It interprets that 1% decrease in the level of corruption may leads to about 8.15, 9.25 and 11.5% increase in FDI inflows by using REM, FGLS and PCSE respectively. Other control variables like gross domestic product per capital (GDPPC), gross domestic product growth rate (GDPG), population growth rate (POPG), urban population growth rate (UPOPG), trade openness, tele-density, gross school enrolment in primary (GSEP), agglomeration, bureaucracy (BURA), law and democracy are positively statistically significant as expected and risk and inflation are negatively statistically significant. Key words: Random effect model, feasible general least squares, panel corrected standard errors, FDI, corruption.

BackgroundEnvironmental pollution seriously endangers people’s physical and mental health, especially the health of middle-aged and elderly people. Environmental pollution, trade openness, and population health are interconnected. Environmental pollution may have a nonlinear impact on health, and the impact of trade openness on the health effects of environmental pollution may not be a simple strengthening or weakening effect. However, few studies have used threshold effects model to explore the nonlinear mechanisms of environmental pollution’s impact on health in China. As a result, this study incorporates trade openness into the research framework on the health effects of environmental pollution, aiming to study the mechanism of environmental pollution on health.MethodsUsing the China Health and Retirement Longitudinal Study (CHARLS) data from 2013 to 2020 and the data of 111 prefecture-level cities in China, we combine two-way fixed-effects models and threshold models to explore the effects of environmental pollution on the health of middle-aged and elderly people and the role of trade openness in the path of environmental pollution affecting health.ResultsEnvironmental pollution impairs the health of middle-aged and elderly people, and there is a single threshold effect and regional heterogeneity in this negative impact. Trade openness has the effect of first weakening and then strengthening in the inhibitory effect of environmental pollution on health.ConclusionThe negative impact of environmental pollution on health has regional heterogeneity, and there is a nonlinear relationship between environmental pollution and the health of middle-aged and elderly people. The health effect of environmental pollution is mainly long-term effect, and trade openness has a threshold effect on the impact of environmental pollution on health. Therefore, instead of adopting a one-size-fits-all policy, environmental and economic policies should be customized according to the degree of environmental pollution, trade openness, and regional variations, so as to safeguard the health of middle-aged and elderly individuals through effective environmental governance.

Amidst on the debate of the trade openness (TO) importance in influencing an economic growth (EG) and the central bank policy rate (CBPR), it is necessary to analyze the long-term relationship by using ARDL. This paper aims to analyze the CBPR and TO influence on EG in ASEAN -3. This study examines the EG model which focuses on the effect of CBPR and the ratio of exports in which plus imports divided by GDP as a measure of TO in ASEAN-3. The Data was collected from IFS for Indonesia, Philippines and Thailand for the period 2007q1-2022q2. The ARDL test method is used to determine the long-term relationship among the EG, TO and CBPR variables with different degrees of the integration. The FMOLS, DOLS, and CCR testing is for check robustness. The study show that CBPR has a positive effect on the EG in ASEAN-3, although it is only in Indonesia, and in Philippines which is statistically significant. The TO positive effect on the EG in Indonesia and in Thailand, but it is not significant and it has a TO statistically significant negative effect on EG in Philippines. The importance of this research given the recent interest in globalization activities, so the role of TO has become very important. A better TO understanding whether import dominance or vice versa helps in understanding the impact of globalization on the country economy. This finding emphasizes on the export importance over the imports in the economy. However, there is not an academic research looks at the long-term relationship between monetary policy and trade openness on the economic growth with the various econometric models.

The study empirically evaluates the impact of broadband penetration and value creation on the profitability of MNEs in Nigeria. The study adopted the survey research design to elicit responses from 1000 Nigerians that were randomly sampled with an e-questionnaire and 152 staff of NCC. The Cronbach Alpha model shows overall reliability of 0.706. The result from the multiple regression from the 1000 Nigerians shows an Adjusted R-square of 0.230 which explains that 23.0% of the variability of profitability is explained by broadband penetration and value creation. The correlation coefficient result shows that there is a significant and moderate relationship between profitability and broadband penetration with a value of 0.414. Similarly, profitability and value creation also show a significant and moderate relationship with a value of 0.359. However, the relationship between value creation and broadband penetration was significant and moderately correlated at 0.346. The Adjusted R-square of 0.040 for the 152 staff of NCC shows that 4.0% of the variability of profitability is explained by broadband penetration and value creation. The correlation coefficient shows that there is a positive but weak relationship between profitability and broadband penetration of 0.111. Also, profitability and value creation have a positive but weak relationship of 0.215. More so, broadband penetration and value creation show a positive but weak relationship of 0.159. The F-statistic value of 4.115 and a P-value of 0.018 indicates that the variables are statistically significant. The study recommended that the Nigerian Communication Commission should develop a national backbone network through which Nigerians can access the internet rather than relying on mobile broadband whose coverage is limited in rural areas.

Does artificial intelligence promote energy transition and curb carbon emissions? The role of trade openness

Purpose – The objective of this paper is to explore the impacts of trade openness and the inflows of FDI on brain drain in the case of developing world. This is a new strand as existing literature has focused on the relationship between trade openness, FDI and economic growth. Design/methodology/approach - We utilized panel data of 56 developing countries of origin and 20 OECD host countries for 1985-2010 time period. Panel econometric techniques are utilized to check cointegration among the variables. Fully modified ordinary least squares and dynamic ordinary least squares methods are used to estimate coefficients of the variables. Similarly, pairwise granger causality test is carried out to check the direction of relationship. Findings - Using panel cointegration techniques, the study reveals that both trade openness and FDI matters for brain drain. The results indicated that openness of trade has a positive and FDI has a negative impact on brain drain problem. Further, the empirical results revealed one way causality from FDI to trade openness and from brain drain to trade openness. Policy makers of the developing world are expected to be benefited from the results of the study and hence they would in turn be in a better position to make appropriate policies regarding both FDI and trade openness to overcome the problem of brain drain. Originality/value – The findings of the paper are original as the available literature ignored the role of trade openness and FDI regarding the issue of brain drain.