The Resurgence of Income Inequality in Asia-Pacific: The Role of Trade Openness, Educational Attainment and Institutional Quality

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.

PurposeThis paper empirically investigates whether trade openness (TO) in Brazil, Russia, India, China and South Africa (BRICS) countries affects how banks might employ loan loss provisions (LLPs) to smooth out their earnings and how adopting the International Financial Reporting Standards (IFRS) can mitigate it.Design/methodology/approachThe analysis includes 78 commercial banks from five BRICS nations and spans 2014 through 2020. To test these hypotheses, the authors utilized a fixed-effect and two-step system panel generalized methods of moments (GMM) estimator.FindingsTO positively affects income smoothing (earnings management) across BRICS commercial banks. The effect is clearer in banks that make financial reports under the IFRS. Path analysis reveals that the effect of TO is driven by nonperforming loans (NPLs). Additionally, the IFRS restricts earnings management in the BRICS banking sector when a better institutional environment is present. The authors found that accounting rules (IFRS) and enforcement (better institutional settings) interact to enhance earnings’ quality.Practical implicationsThe relationship between TO and bank earnings management practices is important for understanding the complex interplay between trade and finance and ensuring financial stability, investor confidence and regulatory compliance. This study recommends better regulations and governance mechanisms for financial reports in emerging nations like BRICS. Additionally, macro-prudential regulators and banking supervisors should work closely to ensure transparent TO decisions with improved discipline, institutional quality and regulatory support to enhance bank stability.Originality/valueThe study finds evidence of bank income smoothing in the BRICS and introduces TO as a determinant. It also identifies the evolving role of IFRS in the presence of higher institutional quality and TO, thereby expanding the financial reporting literature.

The present study attempts to examine the link between trade openness and sustainable human development (SHD) in 19 emerging economies. The study used the data for the period from 1996 to 2019. The study employed fixed-effect regression with Driscoll-Kraay standard error techniques robust to cross-section dependence. The study found the favorable impact of trade openness on sustainable development through sustainable human development. Trade openness affects sustainable human growth in many ways. It is a critical component that should not be ignored in sustainable development policies. Moreover, foreign direct investment, economic growth, and renewable energy consumption positively impact the sustainable human development. In contrast, innovations and institutional quality have an adverse impact on SHD. The study also provides policy suggestions for the emerging economies that will promote all the dimensions of sustainable development: economic, social, and environmental.

Food production remains an elusive aspiration for Somalia, persistently undermined by entrenched poverty and fragile governance systems. Limited integration into global trade networks further exacerbates the nation’s struggle to secure stable and nutritious food supplies. Therefore, this study investigates the links between these variables and their influence on food production using sophisticated econometric approaches such as the autoregressive distributed lag (ARDL), dynamic ordinary least squares (DOLS), and Granger causality tests over the period 1991–2020. The findings indicate that trade openness significantly enhances food production by 0.019%, whereas poverty significantly constrains farmers’ productive capacity—through limited access to inputs, credit, and technology—by 0.42%. Although institutional quality holds conceptual significance, its direct effect on food production seems minimal, indicating that meaningful enhancements in governance may necessitate an extended period. Considering the results, Somalia’s pathway to sustainable food production hinges on transformative approaches that actively dismantle poverty barriers, strategically open trade channels, and patiently nurture institutional maturity to foster long-term resilience in the food system.

Pricing behavior and the role of trade openness in the transmission of monetary shocks

Informal economy is highly developed in sub-Saharan African countries, particularly, in West African Economic and Monetary Union Countries (WAEMU). In fact, the size of informal economy has been around 50% of GDP in recent years, despite the efforts made by international institutions (IMF and the African Union (AU)) to contain its development. It should be noted that informality increase has consequences on economy. On the one hand, a thriving informal economy can cause serious difficulties for policymakers because official indicators on unemployment, labor force, income, and consumption are unreliable. A policy based on wrong official indicators may be ineffective or even worse. On the other hand, a large amount of informality is found to be detrimental to economic growth. Notwithstanding these facts, this large size of informality is accompanied by a financial sector that is struggling to develop, despite the various efforts of the authorities in charge of this sector. Added to this is the low quality of public institutions in these countries. Based on these facts, the aims of this research is to analyze the effect of financial development on the development of informality, but also the non-linear relationship between informal economy, financial development and the quality of institutions, in of the West African Economic and Monetary Union countries (WAEMU), over period of 1991 to 2017. For this purpose, pooled mean group (PMG) model is used to analyze the effect of financial development on the informal economy. And for the non-linear analysis, threshold model specification (Panel Threshold Regression: PTR) is used. The results show that for financial development to contribute to reducing the size of the informal economy, the quality of institutions must reach a threshold of 0.575 on a scale of 0 to 1. It also shows that real GDP per capita and education attainment have a negative effect on informality. On the other hand, the unemployment rate, the rate of urbanization and the share of agriculture in GDP have a positive effect on informality.

Pricing Behaviour and the Role of Trade Openness in the Transmission of Monetary Shocks

Exchange rate regimes and fiscal discipline: The role of trade openness

Institutional Quality and Income Distribution

Food insecurity poses a serious and ongoing threat to many developing countries, where rapid population growth has reshaped the landscape of food production and distribution. This study examines the non-linear analysis of urban and rural populations on food security. Besides these effects, it also explores the key determinants of food security, with a special focus on the role of trade openness, foreign direct investment, education, and institutional quality dynamics. The empirical results are estimated using the Panel Quantile Regression approach of 47 developing countries from 2002 to 2023. This approach reveals an inverted U-shaped relationship between both urban and rural populations on food security. The linearized marginal effect shows that the urban population is more vulnerable to food security compared to the rural population in developing countries. Moreover, education enhances food security, while foreign direct investment and trade openness cause food insecurity in developing countries. This study recommends that developing countries should promote sustainable urban development and strengthen rural agriculture systems.

Trade is one of the cornerstones of socio-economic development for Africa. Intra-continental trade stimulates productive capacity and competitiveness in nations through exposing domestic industries to competition. The purpose of this study was to investigate how information and communications technology (ICT) infrastructure impacts on intra-African trade, taking into account other relevant factors that also influence trade such as Institutional Quality and Educational Attainment. Archival data about Telecommunications Infrastructure (a key indicator of ICT infrastructure), Institutional Quality and Educational Attainment and Trade Flows (Export and Import) from 28 African countries were used as empirical evidence. The research employed structural equation modeling with partial least squares to analyze data. The empirical analysis shows that the Telecommunications Infrastructure has a major impact on intra-African trade. Interacting factors such as Institutional Quality and Educational Attainment also play a role in influencing intra-African trade.

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.

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.