Increased Trade Openness Research Articles

BRICS-T Ülkelerinde Ekonomik Büyüme Üzerinde Yenilenebilir Enerji Tüketiminin Etkisi

In this study, it is aimed to investigate the effect of renewable energy consumption on economic growth in BRICS countries and Turkey. In this context, panel data analysis in the form of coefficient estimates and causality analysis was applied using annual data for the period 1990-2018. Within the scope of the determinants of economic growth, besides the renewable energy consumption variable which forms the basis of the study, the variables of capital accumulation, population, trade openness, foreign direct investments and non-renewable energy consumption are also used. According to the coefficient estimation results made with the fixed effects model, it has been determined that the increase in renewable energy consumption has negative and significant effects on economic growth. On the other hand, it has been determined that the increase in non-renewable energy consumption has a positive effect. In addition, it is among the findings that the increase in capital accumulation has a positive effect on economic growth and the increase in trade openness has a negative effect. Finally, Dumitrescu-Hurlin (2012) panel causality test results revealed that there is a unidirectional causality relationship from renewable energy consumption to economic growth. Accordingly, it was seen that the growth hypothesis was valid among the variables.

The impact of institutional quality on foreign direct investment: empirical analysis based on mediating and moderating effects

The purpose of this paper is to investigate the relationship between institutional quality and foreign direct investment (FDI) inflows using panel data of 42 G20 countries from 2005 to 2020. The results indicate a positive association between them. Mediating analyses reveal that institutional quality attracts FDI inflows by increasing trade openness, accelerating industrial structure optimization, and encouraging technological innovation. Furthermore, financial development, tax level, and natural resource abundance moderates the positive association between institutional quality and FDI inflows. Among them, financial development and natural resource abundance strengthen the promoting role of institutional quality in attracting FDI; the tax level weakens this process. These findings have implications for policymakers seeking to make full use of favourable institutions to achieve sustainable growth of FDI.

RETRACTED: Green finance strategies for mitigating GHG emissions in China: Public spending as a new determinant of green economic development

In order to lessen China’s carbon footprint, the government has turned to environmentally friendly financing. A reduction in CO2 has been reported in some Chinese provinces where green finance has been developed. Numerous regions in China from 2010 to 2020 are selected for this study. Based on a Dynamic Seemingly Uncorrelated, fully modified ordinary least squares and dynamic ordinary least squares regressions model, empirical research is performed with per capita growth in the economy, public spending, and the relationship between economic growth, human resources, and industrial arrangement as core variables to test the influence of green financing on CO2 emission in Chinese provinces. According to the findings, green financing speeds up the reduction of carbon emissions. Moreover, the outcomes present that industrial structure, economic growth per capita, and trade openness increase carbon emissions. Likewise, public expenditures and human capital are significantly contributing to emissions reduction. The findings show that sustainable green environment can only be achieved by boosting the performance of green finance and increasing the level of green finance supported by the Chinese economy. Last but not least, policymakers should promote public health and education spending to fully engage in the protection of the environmental efforts to encourage green consumption while minimizing the structural problems resulting from economic activity.

Determinants for international competitiveness of the food industry in 43 countries world-wide: evidence from panel models

Research background: Food industry is of key importance to each economy due to its role in ensuring food security, balancing the labour market, as well as contributing to the economic growth and international trade. With a limited increase in demand for food in many highly developed countries, further growth in this sector of the economy will largely depend on the ability to successfully distribute manufactured goods in international markets and cope with competitive pressure from other entities. Purpose of the article: Therefore, the study attempts to assess the determinants of international competitiveness of the food industry worldwide measured by the trade balance. Methods: The research was based on data from the United Nations Conference on Trade and Development Data Center (UNCTADStat) and the World Input-Output Database (WIOD). The time frame for the analyses was determined by the availability of internationally comparable data and thus covered the period of 2000?2014. The empirical analysis was performed with the use of panel models, while international competitiveness was measured by trade balance (net export). Findings & value added: It was proved that increasing trade openness and relative demand, as well as decreasing relative unit labour costs have a positive impact on international competitiveness of the food industry worldwide. However, the nature of the relationship between relative labour productivity and trade balance appears to be ambiguous. A stronger impact of the examined factors on net exports in the long-run rather than the short-run was also evidenced. The novelty of our analysis is that we consider trade balance determinants of the food industry worldwide using panel models, whereas most of the existing studies focus either on one or a narrow group of countries.

Investigating an optimal resource dependency to prevent natural resource curse: Evidence from countries with the curse risk

The aim of this research is to find the optimal level of resource dependence that will eliminate the possibility of natural resource curse in 28 countries. First, the validity of a potential inverted U-shaped relationship between natural resource dependence and economic growth is explored, followed by the computation of the optimum dependency level that maximizes economic growth. A second empirical model is also developed to compare the optimal levels of resource dependence for economic growth and sustainable development. In doing so, second generation panel data methods are used, which account for the cross-sectional dependence of the 1990–2017 period. Furthermore, the impact of factors such as human resources, trade openness, and institutional efficiency, which are thought to mitigate resource risk, are studied. Our findings show that current resource dependency level does not appear to be a barrier to economic growth in 17 of the 28 countries, but it does appear to be a curse for sustainable development in 9 of 17 countries as well as the other 11 countries. Furthermore, it is concluded that increased trade openness promotes economic growth while harming sustainable development.

Capital Account Openness and Financial Stability in Asian Emerging Markets

Post the Global Financial Crisis (GFC) of 2008, there has been an increased focus on financial stability along with the growth objectives. The role of capital flow measures like capital controls and macroprudential regulations has gained prominence in increasing the resilience of the financial system of an economy. In this context, this paper examines the ramification of capital account openness on the financial stability indicators with controls for macroeconomic fundamentals, for the Asian Emerging Markets using the annual data of seven economies from 1980 to 2019. The methodology in the paper employs panel data cointegration techniques along with Augmented Mean Group (AMG) estimation to control for cross-sectional dependence, cross-sectional heterogeneity, and nonstationarity. The results indicate that capital account openness and trade openness increase financial instability in the economy while global risk shows mixed results. The economic development of the country, proxied by the size of the economy has a mitigating effect by reducing volatility in the financial sector.

ARDL Approach to Drivers of Inclusive Growth In India

The call for inclusive growth has been unanimously declared by policymakers across the world. With India’s rapid economic growth rate, Indian policymakers also set its economy on the track of inclusive growth while formulating the 11th Five Year Plan. Despite, India’s fast-growing and vibrant economy, it fails poorly in Human Development Index ranked 131 in 2016. An unfortunate aspect of the current phase of high growth of the Indian economy has been its ‘non-inclusive’ nature. The distribution of income has been highly iniquitous. The richest 1% in India cornered 73% of the wealth generated in 2017, presenting a worrying picture of rising income inequality. In this regard, the study attempts to identify the determinants of inclusive growth in India by using annual data from 1981 to 2015. The study employs the autoregressive distributed lag (ARDL) model and the error correction method (ECM) to investigate the long-run and short-run relationship between inclusive growth and its determinants. The bounds test findings confirm the cointegrating relationship among variables. The ARDL estimates suggest that growth in initial income, government expenditure, human development, investment and financial development fosters inclusive growth; while inflation and population growth dampens it. The results also imply that increasing trade openness and foreign direct investment would not be beneficial for India in terms of growth inclusiveness. Based on these findings, the study recommends that the Government of India should take appropriate steps to increase per capita income and social spending with particular attention to macroeconomic stability while they work at improving the quality of population in order to achieve sustainable and robust inclusive growth.JEL Codes: Q4, F1, H7, D31, O43

How Economic Performance of OECD economies influences through Green Finance and Renewable Energy Investment Resources?

Recently, the economic and environmental performance has become a global requirement, and green finance and renewable energy have been considered the foremost solutions for researchers’ attention. Thus, the current study examines the potential relationship between the variables of green finance, investment in renewable energy projects, economic performance, and the environmental performance of OECD countries. The study has used secondary data downloaded from world-renowned reliable resources like the World Bank websites, the OECD data sets from the official website of the countries, and IRENA. The researcher has used structural equation modeling in this study, unlike previous empirical research trends. The analysis has revealed that green finance and investment in renewable energy sectors are responsible for economic growth. To be more precise, the results can be summarized to explain that in the OECD region Green Finance and investments in the renewable energy sector are responsible for generating positive economic outputs in terms of an increase in trade openness, attraction of FDI, and GDP. Furthermore, it is also shown that reducing greenhouse gas emissions and carbon dioxide production and emission can lead to better environmental performance. The environmental performance is also a positive moderator between the relations of green finance with the economic performance and renewable energy investments and economic output in the OECD countries. The outcomes of the current study will be helpful for the policy makers and practitioners in OECD countries and other similar regions in the world in terms of proper planning of their investments aimed toward achieving sustainable economic growth and environmental sustainability.

FDI and Trade Openness in the Tourism Market in Asian Emerging Market Economies

FDI and trade openness are considered development tools in all sectors, and the tourism sector is no exception. We examine the impact of inward FDI and trade openness on tourism in selected Asian emerging markets using panel data from the Autoregressive Distributed Lag of the Pooled Mean Group model and examine the direction of the causality of inward foreign direct investment and trade openness on tourism using the Granger causality test for the period 1996-2019. In our research model, we employed the number of tourists’ arrivals as the dependent variable and inward foreign direct investment and trade openness as the main independent variables. The control variables are as follows: GDP growth rate, inflation, mobile telephone subscriptions, and the global financial crisis of 2008. According to the pooled mean group ARDL estimation results, inward FDI, trade openness, GDP growth rate, inflation, and mobile telephone subscription variables had long-run significance in explaining tourism, whereas the global financial crisis dummy variable did not explain tourism arrivals. In the short run, an increase in the GDP growth coefficient attracted more international tourists to Asian EMEs, whereas an increase in inflation reduced tourism arrivals. The study found that there is a unidirectional relationship between FDI inflows and tourism arrivals, with the causality flowing from tourism to FDI. Furthermore, the results of the causality test implied that there were bidirectional connections between tourism and trade openness in Asian emerging markets. The study suggests that emerging economies should also promote short-term policies to increase international tourism by increasing trade openness and foreign direct investment.

The Role of Economic Infrastructure and Trade Openness in Attracting Foreign Direct Investment in Developing Countries

The purpose of this paper was to examine the role of economic infrastructure and trade openness in attracting foreign direct investment in developing countries. The study used secondary data from 1997 to 2019 to analyse 95 developing countries selected as per data availability. Pooled regression was performed on the panel data using E-views computer software. The method used was fixed effect model and the two-stage estimated generalized least squares estimation with cross-section weights and instrumental variables. The paper tested seven equations for robustness and results analysed after cointegrating regression Durbin-Watson test. The study tested the significance of economic infrastructure and degree of trade openness in the attraction of foreign direct investment inflows among other variables. The study established a positive and significant correlation between foreign direct investment inflows and economic infrastructure. The paper also established a positive and significant correlation between foreign direct investment inflows and the degree of trade openness. The study concluded that better economic infrastructure and increased trade openness individually results in increased foreign direct investment inflows. Unequivocally therefore, this paper showed that countries with good economic infrastructure will drastically reduce transport cost. With good infrastructure in place, increased degree of trade openness will lead to a greater marginal gain in foreign direct investment inflows. Consequently, empirical results showed that, economic infrastructure and trade openness interact. This interaction makes a given developing country more attractive as a foreign direct investment destination. Unambiguously, this study found a negative interaction between economic infrastructure and the degree of trade openness, inferring that the most economically advanced developing countries tend to attract higher foreign direct investment inflows but at a decreasing rate compared to the least economically advanced developing countries.

Linkages and changing factor use in Indian economy: Implications of emerging trade pattern

Globally, a greater component of trade in intermediates—parts and components—is a characteristic of the changing paradigm of international trade. Consequently, alongside the increasing trade openness of the Indian economy, the access to international factors of production has increased through their embodied use during the production of intermediates that are imported. Thus, the emerging trade pattern has the potential to impact the use of factors of production of domestic origin through linkages in the internal economy. This paper makes an assessment of the changing intensity of use of the two factors of production, viz., labor (L) and capital (K), in the economy. The analysis aims to provide an estimate of the impact of import utilization on the use of labor and capital. In the backdrop of a generally declining employment intensity, the employment foregone effect from the use of imported intermediate inputs is observed to have worsened over the period of study. Ironically, this has contributed to lower domestic employment, even in the traditionally labor-intensive sectors. The employment effect of import utilizations is also reflected in the declining share of labor income. The use of capital embodied in imported intermediates has contributed to increasing the capital intensity of the economy despite the low domestic capital investment. This underscores a greater dependency on capital-intensive imports. While import reliance has increased for both employment and the capital goods through their embodied use in the imported inputs, the dependency on imported capital has been stronger. A higher relative use of capital (K-to-L) indicates that the production method is relatively capital-intensive, thus requiring more capital goods and investment. The findings resolve the puzzle of India’s increasing relative use of capital alongside a slowdown of domestic investments in productive capital. The deficit on domestic investment has been compensated through import utilizations of capital goods.

Impact of Foreign Direct Investment on the Carbon Dioxide Emissions of East Asian Countries Based on a Panel ARDL Method

The problem of air pollution caused by carbon dioxide emissions has gradually attracted the international community’s attention. The study shows the effect of foreign direct investment on carbon dioxide emissions in East Asia. Based on the 2011–2020 panel data of East Asian countries, the long- and short-term impacts of trade, foreign direct investment (FDI), and economic growth on the carbon dioxide (CO2) emissions of these nations are estimated using an autoregressive distributed lag model. The results show that in the short term, an increase in per capita gross domestic product (GDP) in the current and previous periods will increase carbon dioxide emissions; an increase in FDI in the current and previous periods will increase CO2 emissions; an increase in trade openness in the current period will increase CO2 emissions. In the long term, per capita GDP, FDI, and trade openness have no significant impact on CO2 emissions. We should encourage foreign-invested enterprises to use and disseminate clean production technologies and environmentally friendly management methods and pay attention to trade structure adjustment.

The nonlinear effect of land freight structure on carbon emission intensity: new evidence from road and rail freight in China.

The extensive literature has debated the varying effects of factors on carbon dioxide (CO2) emissions. However, it has paid little attention to land freight structure (FS), including road and rail freight share, which may have different effects on CO2 emissions. Based on the data from 6 eastern provinces in China during 2005-2019, the panel threshold model is used to explore the dynamic influence mechanism of road and rail freight share on transport carbon emission intensity (CE), respectively. The results show different nonlinear relationships between the share of road and rail freight and transport carbon emission intensity. First, the effect of road freight share on carbon emission intensity is all positive across different stages of trade openness, while such effect goes through a process of increasing and then decreasing with the level of trade openness improving. Second, the driving effect of rail freight share on carbon emission intensity exhibits a "negative-positive-negative" feature as the level of trade openness increases. Third, trade openness generates a double-threshold effect on carbon emission intensity. The differentiated nonlinear effects provide significant evidence of the modal shift from road to rail freight, which would be effective to alleviate transport CO2 emissions.

An empirical assessment of electricity consumption and environmental degradation in the presence of economic complexities

To a large extent, the theories and concepts behind the effect of ecological footprint have been the paramount concern of the recent literature. Since the rising and falling of environmental degradation have been a continuous issue since the first phase of development, determinants such as economic complexity may play a critical role in achieving long-term sustainable development in the framework of environmental Kuznets curve (EKC) paradigm. Therefore, this research expands on the notion of an EKC paradigm for the world’s top ten most complex economies by considering four variables, such as real GDP per capita, electricity consumption, trade openness, and a new putative factor of environmental obstacle, the economic complexity index (ECI). This is one of the first studies to look at the impact of ECI on the ecological footprint of a specific sample from 1998 to 2017. The findings demonstrate a continuous inverted U-shaped link between real GDP per capita, the square of real GDP per capita, and ecological footprint. The EKC hypothesis is found to be valid in the long term in the examined complex economies. The findings of the panel autoregressive distributed lag (ARDL) of the pooled mean group (PMG) and fully modified ordinary least squares (FMOLS) estimations demonstrate that in the long term, electric power usage contributed to the carbon footprints. Furthermore, the economic complexity index and trade openness increase environmental performance over time. To determine if there is causation between the variables, we employ the panel vector error correction model (VECM) framework. Particularly, the results show unidirectional causality running from electric power consumption to ecological footprint and bidirectional causal relationship between (1) economic growth and ecological footprint; (2) square of economic growth and ecological footprint; (3) economic complexity index and ecological footprint; and (4) trade openness and ecological footprint.

Assessing the asymmetric impact of physical infrastructure and trade openness on ecological footprint: An empirical evidence from Pakistan.

This study analyzed the asymmetric impact of the physical infrastructure and trade openness on Pakistan's ecological footprint over the period 1970-2019 using the non-linear autoregressive distributed lag model. The study results posit that positive and negative shocks to physical infrastructure increase and decrease the ecological footprint asymmetrically in the short-run and symmetrically in the long-run. Likewise, the positive and negative shocks to trade openness increase and decrease the ecological footprint asymmetrically, both in the short and in the long run. Furthermore, urbanization also positively and significantly increases Pakistan's ecological footprint in the short and long run. Moreover, a 1% increase in physical infrastructure increases the ecological footprint by 0.32%, while a 1% decrease in physical infrastructure decreases the ecological footprint by 0.33% in the long run. Similarly, a 1% increase in trade openness causes a 0.09% increase in the ecological footprint in the long term, while a 1% reduction in trade openness causes a 0.61% reduction in the ecological footprint. The results also conclude that urbanization is a major determinant of Pakistan's long-term ecological footprint. Thus, a 1% increase in urbanization causes a 1.31% increase in the ecological footprint in the long run. Finally, this study recommends that policies regarding physical infrastructure be formulated keeping in view its environmental impact. In addition, strict environmental policies should be implemented to reduce the environmental degradation effect of trade openness.

Insights from European nations on the spatial impacts of renewable energy sources on CO2 emissions

Previous studies ignore the geospatial dynamics effects between renewable energy (RE) and CO2 while assessing such impacts in European countries. Further, most studies wrongfully use RE in its aggregated format rather than decomposing RE by its components. This is important as not all the RE sources share the same characteristics. We fill these gaps in the literature by investigating the effects of various forms of RE on CO2 emissions in 36 European countries from 2000 to 2018. Spatial econometric models have been used to better understand the results. A series of indicative tests confirmed the use of the Durbin panel model and the inclusion of spatial interaction of CO2 emissions in models. Our results confirm the Environmental Kuznets Curve hypothesis in our sample. We identify a positive and significant effect of economic growth (captured through GDP per capita), foreign direct investment, urbanization, and energy intensity on CO2 emissions. Our findings indicate that increasing well-established RE technologies such as geothermal and hydropower lower CO2 emissions. However, increasing RE sources with more advanced technologies such as solar, wind, and bioenergy either increase or have no impact on CO2 emissions. Increasing RE sources as a whole result in a reduction of CO2 emissions in our sample of countries. Moreover, our spatial models suggest that foreign direct investment lowers local CO2 emissions, while neighboring countries’ energy intensity and trade openness increase local CO2 emissions. Lastly, we find solar and bioenergy generation in adjacent countries increase local CO2 emissions, whilst geothermal generation in adjacent countries lowers local CO2 marginally.

Modeling the determinants of renewable energy consumption in Nigeria: Evidence from Autoregressive Distributed Lagged in error correction approach

Different solutions have been designed to solve the climate change impacts. One recommended solution is to use renewable energy sources to power up economic activities. Renewable energy lowers the carbon footprint, generates no emissions and reduces harmful air pollutants. This research investigates the determinants of renewable energy consumption in Nigeria from 1960 to 2019 using the Parameterization Autoregressive Distributed Lagged in Error Correction approach. Nigeria is used as a case study because of its position and role in African and global economies. In the long-run, gross domestic product and financial development promote renewable energy consumption, and fossil fuel energy consumption harms renewable energy consumption. As gross domestic product increases by 1%, renewable energy consumption increases by 0.11%. A 1% increase in fossil fuel energy consumption decreases renewable energy consumption by 0.0008%. As financial development increases by 1%, renewable energy consumption increases by 0.026%. In the short-run, trade openness has a negative impact on renewable energy consumption. A 1% increase in trade openness decreases renewable energy consumption by 0.005%. Therefore, it is suggested that the Nigerian government continue to create policies that increase the Nigerian economy's productive capacity and regulate the importation of fossil fuel-related goods in favor of renewable energy products.

Gauging the Impact of Openness on Sustainable Development in Nigeria: Evidence from FM-OLS and ARDL Approaches to Cointegration

This paper considers the nexus between trade openness and sustainable development in Nigeria from 1996 to 2019 by employing Fully Modified Least Square (FMOLS) and Autoregressive Distribution Lags (ARDL) techniques. Our results suggest that trade openness has a significant positive impact on sustainable development and is Nigeria's economic pillar of sustainability. The paper also reveals a significant disparity in magnitude and sign of the parameters when ARDL is used. In the long run, openness to trade has a significant positive impact on sustainable development in Nigeria, implying that an increase in trade openness will improve sustainable development in Nigeria. The effect of the age dependency ratio is insignificant inverse, showing that it does not affect sustainable development. Furthermore, in the short run, except for trade openness and age dependence ratio that has a significant effect, all other independent variables are not statistically significant. The paper concludes that trade openness positively impacts sustainable development in Nigeria. The paper's hypothesis is likely to trigger a fresh conversation on how to promote sustainable development and so mitigate environmental risks.

Trade Openness, Industrialization, Urbanization and Pollution Emissions in GCC countries: A Way Towards Green and Circular Economies

The GCC countries are moving toward circular and green economies in their long-run visions. This transformation is accelerating the industrialization, urbanization, economic growth, and Trade Openness (TO) in the region. This present study examines the effects of these economic indicators on pollution emissions in the GCC panel from 1980-2019 using panel techniques. We found the environmental Kuznets curve. Moreover, TO is helping reduce CO2 emissions. Hence, economic growth and TO are helping the GCC region to follow the track of green and circular economies. In short run, TO also reduces emissions. Industrialization and urbanization accelerate emissions in long run. Thus, both indicators have environmental consequences in the GCC region in the long run. However, these indicators could not harm the in short run. To follow the track of green and circular economies, the study recommends increasing trade openness in the region and imposing carbon taxes on industrialization and urbanization to reduce their environmental consequences.

The Effect of Government Debt on Private Investment in Advanced Economies: Does Institutional Quality Matter?

Unlike developing economies, advanced economies easily borrow debt to finance budget deficits. Government debt is one of the active measures of fiscal policy in these economies to run the economy and overcome its cyclicality. Most related studies note that government debt reduces private investment. Does it hold for advanced economies? Does institutional quality significantly affect the government debt – private investment relationship in these economies? For the answer, the study applies the PMG estimator (PMG) and the two-step difference GMM Arellano & Bond estimator (D-GMM) to investigate the impacts of government debt, institutional quality, and their interaction on private investment in 36 advanced economies from 2002 through 2019. The estimated results report that government debt crowds out private investment, while institutional quality enhances it. However, their interaction crowds out it. It seems counter-intuitive. Besides, economic growth and trade openness increase private investment while inflation decreases it. These results indicate the crucial implications for central governments in advanced countries in using and managing government debt.