The dynamic nexus between air transport, technological innovation, FDI, and economic growth: evidence from BRICS-MT countries.

Abstract

This study examines the endogenous growth theory for technological innovation and economic growth with the role of foreign direct investment (FDI) and air transport freight in seven emerging BRICS-MT economies. In the existing literature, there is no significant empirical evidence on the dynamic relationship among technological innovation, air transport freight, FDI, and economic growth in BRICS-MT countries. Thus, the current study contributes to the growing literature regarding the role of technological Innovation, air transport, and FDI on economic growth. To this end, we explore the dynamic nexus between technological innovation, air transport, FDI, and economic growth in 7 selected emerging BRICS-MT countries, including Brazil, Russia, India, China, South Africa, Mexico, and Turkey. This study covers the most recent updated period for panel data from 2000 to 2019. We applied panel cointegration, dynamic ordinary least square (DOLS), fully modified ordinary least square (FMOLS), and Granger causality tests to draw empirical inferences. The Pedroni panel and Kao residual cointegration tests confirm the long-run relationships among the variables. The DOLS results indicate that air transport freight, technological innovation, and FDI significantly positively impact economic growth. This study's findings confirmed the endogenous growth model in BRICS-MT countries. Furthermore, the Granger causality test results show the feedback effect of FDI on economic growth. The outcomes of this study also show the unidirectional causal relationship between air transport freight and economic growth. Moreover, the results provide support to economic policymakers in their decision-making. These results fill the gaps that assist policymakers of BRICS-MT countries in removing barriers to air transport freight, technological innovation, and foreign direct investment, thereby achieving sustainable economic development.