Uncovering interlinks among ICT connectivity and penetration, trade openness, foreign direct investment, and economic growth: The case of the G-20 countries

Abstract

The global economy is increasingly integrated due to the information and communication revolution. Countries have become more reliant on global supply chains that are driven by digital platforms. As a result, information and communication technology (ICT), international trade, and foreign direct investment (FDI) appear to have become drivers of economic growth. In this paper, we investigate whether this logical assertion is true. More importantly, we examine the interlinks among the variables in the short and long run. Directions of causal links among these variables are complex and sometimes subtle and it is therefore important to establish them through rigorous empirical analysis. For our study, we consider the G-20 countries over 1961–2019. Our study reveals a myriad of underlying temporal links among the variables. The key policy implication of these results is that long-term growth in this group of countries depends on greater co-development and harmonization of policies on ICT, FDI, and trade openness. Moreover, policymakers should be cognizant of the short-run connections between the covariates.