Trade Openness Research Articles

Green Knot: trade openness and digital commerce contribute to the natural resources

This study examines the complex relationships among trade liberalization, effective use of natural resources, and digital commerce, particularly on data from China from 2010 to 2022. It analyses sustainable factors driven by resource exploitation, such as carbon emissions, adoption of renewable energy, and ecological integrity, using the Generalized Method of Moments (GMM). It is critical to comprehend how trade openness and digital commerce affect resource efficiency in an era characterized by resource scarcity and environmental concerns. When properly managed, they can promote global resource conservation and sustainable technology. The potential of trade laws and digitization tactics to encourage resource conservation, stimulate economic growth, and alleviate resource shortages is highlighted in this abstract. It highlights their part in advancing a resource-efficient and ecologically sustainable future.

The Nexus between Degree of Commercialization, Trade Openness and Tax Revenue Performance in Tanzania

The study was mainly focused on evaluating the nexus between degree of monetization and tax revenue performance in Tanzania. Specifically, the study intends to examine the share of broad money (M2) to GDP and how it influences tax revenue performance in Tanzania. Time series research design was employed, and purposive sampling was used here and has opted for a quantitative research approach while time series data research design was employed.  The study used secondary data obtained from the Bank of Tanzania (BoT), International Monetary Fund (IMF) and World Bank (WB). The data ranges were from 1970-2020. Findings from the study revealed that agriculture shares were positively related to the tax revenue performance, foreign aids were positively related to the tax revenue performance, political stability were positively related to the tax revenue performance Finally trade openness influenced tax revenue performance.  The study concluded that degree of commercialization was positively related to the tax revenue performance. Therefore, this study recommends that policy makers may enact good policy, laws and regulations that will enhance the government to improve the overall tax revenue performance in Tanzania. Also, the study recommends that the government to encourage the exportation to increase tax revenue performance in Tanzania.
  

How does technological innovation affect the ecological footprint? Evidence from E-7 countries in the background of the SDGs

Although technological innovation plays a critical role in promoting sustainable development and environmental sustainability, there are few studies in the existing literature that address this relationship. This study aimed to investigate the relationship between technological innovation (TI), renewable energy consumption (REC), natural resource rent (NRR) and ecological footprint (EF) of E-7 countries (i.e. Brazil, China, India, Indonesia, Mexico, Russia and Turkiye) from 1992 to 2018 in order to ensure environmental sustainability in the context of the Sustainable Development Goals (SDGs). Analysis was performed using the ARDL estimator, robustness test and Dumitrescu-Hurlin panel causality (DHC) test. Long-term empirical estimates from the PMG-ARDL technique have shown that a 1 % increase in TI and REC reduces EF by 0.064 % and 0.234 %, respectively, i.e. increases environmental sustainability. At this point, it is possible to say that TI and REC contribute to the achievement of SDG-7 and 13 in E-7 countries while NRR and real income (GDP) were found to impede the achievement of SDG-7 and 13 in E-7 countries through an increase in EF. The results were confirmed using robustness techniques. In the DHC test results, while there is a unidirectional causality from TI to EF, from EF to NRR and trade openness, a bidirectional causality was found between GDP and EF. This study suggests that policymakers should focus on introducing environmentally friendly equipment to reduce environmental degradation, increase the share of RECs and focus on sustainable development within the framework of the SDGs.

The impact of oil prices, foreign direct investment and trade openness on unemployment rates in an oil-exporting country: The case of Saudi Arabia

This study analyzes the effects of major macroeconomic variables (oil price, foreign direct investment inflows, real gross domestic product and trade openness) on the unemployment rate in Saudi Arabia. The study adopted the ARDL model and bounds testing for co-integration approach and other diagnostic econometric techniques to check potential issues resulting from the use of time series data, from 1991 to 2019. Findings show that changes in the four variables exhibit a significant negative long-run effect on the unemployment rate. Additionally, we detected a non-linear relationship between unemployment and oil prices. The oil price effect is positive only if it exceeds $41.2 per barrel. A per-barrel price of oil below this threshold appears to worsen the labor market situation in Saudi Arabia. Revenues from oil exports account for major source of income for the country; unfortunately, oil prices are subject to factors beyond the control of the country (inconsistencies in global oil prices). The country needs to diversify its economy especially in growth-enhancing sectors of the economy to generate employment and moderate unemployment.

Trade Openness and Gender Inequality in the High Human Development Countries

Trade Openness and Gender Inequality in the High Human Development Countries

Banking Sector and Economic Growth in Congo-Brazzaville

This article analyzes the effects of the banking sector on economic growth in Congo-Brazzaville over the period 1990-2020. The results obtained from the AutoRegressive Distributed Lag (ARDL) model show that in the short term, domestic credit provided to the private sector by banks, bank deposits, foreign direct investments, trade openness, the overall index of civil freedom, the degree of fight against corruption and inflation affect economic growth. On the other hand, in the long term, the degree of fight against corruption and inflation influences economic growth. These results have important economic policy implications in Congo-Brazzaville.

What Drives Renewable Energy Consumption in Asia

In more recent years Asia has had the highest level of investment in renewables and the highest level of electricity generation from renewable sources. This paper analyzes the determinants of renewable energy consumption in Asia and the Pacific from 1996 to 2018. It explores the major challenges this region has faced in moving towards a more environmentally friendly generation and use of energy. We find that the renewable electricity output, GDP per capita, merchandise trade, the value added of the manufacturing sector and the income share held by the poorest population boost renewable electricity consumption. On the other hand, energy use per capita, access to electricity, energy imports, broad FDI, population growth and the income share held by the richest population lower consumption of electricity from renewable sources. Trade openness and being an island do not seem to have a statistically significant impact in our sample over the observed period.

The effects of economic globalization on fertility in developing countries, 1990–2018

Social scientists have long queried the socio-structural determinants of fertility rates. Drawing on the insights of dependency theory, this research investigates the impact of trade openness, exports to high-income countries, foreign direct investment, and debt dependence on fertility rates in developing countries. Results from generalized least squares (GLS) random effects (RE) panel regression models suggest that trade openness has a null effect, while exports to high-income countries is positively associated with fertility. Foreign direct investment is inversely associated with fertility, while debt dependence is positively associated with fertility. This study calls attention to the global–economic processes shaping national-level demographic outcomes.

Can agricultural trade openness facilitate agricultural carbon reduction? Evidence from Chinese provincial data

Being one of the significant conduits linking international and domestic markets, agricultural trade is an area of study that commands attention. While it may bring about transnational carbon emission transfers, it begs the question: does it promote carbon reduction in a country's agricultural sector? Such an inquiry holds profound implications for optimizing agricultural trade and promoting low-carbon agricultural advancement. Utilizing two-way fixed effect model, mediating effect model and dual-fixed spatial Durbin model, this paper examines the impact effects, mechanisms and spatial characteristics of agricultural trade openness (ATO) on agricultural carbon reduction using panel data from Chinese provinces spanning 2000 to 2021. The main findings include: (1) ATO markedly and positively influences the reduction of agricultural carbon emissions (ACE), this conclusion maintains its validity under endogeneity treatment and robustness tests. (2) ATO contributes to reducing ACE through three intermediary channels: scale effect, technological effect, and structural effect. (3) From a spatial perspective, a notable positive spatial spillover effect is observed from agricultural trade openness to agricultural carbon reduction, with the spatial carbon reduction effect being more apparent. (4) The spatial carbon reduction effect of agricultural trade liberalization exhibits heterogeneity across different natural geographical locations and levels of ATO. The study confirms the vital role of ATO in promoting agricultural carbon reduction in typical countries, underscoring the urgency and importance of bolstering cross-border agricultural trade cooperation and domestic agricultural product circulation in the domain of climate change.

Does financial development enhance access to electricity? A rural-urban perspective in India

This paper investigates the relationship between financial development and access to electricity for rural and urban India by incorporating economic growth, trade, and foreign direct investment in energy production function. In doing so, we have applied autoregressive distributed lag bounds testing to examine long run cointegration between the variables by accommodating structural break(s) stemming in the series. Our empirical results indicate the presence of cointegration association between access to electricity and its determinants. We note that financial development enhances access to electricity in rural India but declines it in urban India. Economic growth has positive effect on access to electricity. Trade openness and foreign direct investment lower access to electricity in rural India. In urban India, trade openness and foreign direct investment increase access to electricity. The association between financial development and access to electricity is inverted-U shaped for rural and urban India. This paper would present new policy direction for Indian government to enhance access to electricity by using financial development as an economic tool.

Macroeconomic Determinants of Tax Revenues of South African Countries

This research explores the macroeconomic elements that impact tax income in countries in South Africa. The study considers five countries: Namibia, Botswana, Zimbabwe, South Africa, and Zambia. Its primary objective is to identify key factors influencing tax revenue in these nations and examine their economic impact. Employing multivariate regression analysis, the research evaluates the impact of various macroeconomic indicators, including economic growth, inflation, foreign direct investment, and trade openness on tax revenues, using data from 1990 to 2021. Results indicate that economic growth and trade openness positively influence tax revenue, while inflation adversely affects it. The impact of foreign direct investment on tax revenue varies by country. These findings carry significant policy implications for South African nations, highlighting the importance of focusing on trade liberalization and economic growth to boost tax revenues, while also controlling inflation.

Determinants of Foreign Direct Investment in the APEC Region (Case Studies in 5 Countries, namely Australia, Japan, Singapore, Brunei Darussalam, and Indonesia for the Period 2012-2019)

Foreign direct investment (FDI) is an important factor in the development of a country and plays a crucial role in the growth and development of a country’s economy. FDI can be a source of capital in developing countries to help fund various sectors that are underfunded, this FDI also creates many new jobs so that the unemployment rate can be reduced. The entry of foreign investment is usually accompanied by technology transfer. One of the areas targeted by investors is the member countries of the Asia Pacific Economic Cooperation (APEC). This study aims to determine the effect of inflation, interest rates, and trade openness on FDI (case studies in five APEC member countries, namely Australia, Japan, Singapore, Brunei Darussalam, and Indonesia, period 2012-2019). The analytical method used in this study is the panel data regression analysis method with the seemingly unrelated regression (SUR) model using STATA 16 software for data regression and Eviews 10 to test stationary data. The stationary test of the data in this study uses the Augmented Dickey–Fuller (ADF) method at the first difference because the data level is not stationary. The results of research conducted using the SUR Model show that inflation has a negative and significant effect on FDI, interest rates have a positive and significant effect on FDI, and trade openness has a significant and negative effect on FDI.
 Keywords: foreign direct investment, inflation, interest rates, seemingly unrelated regression, trade openness

The effect of structural reforms on employment and the trade–labour link: Robust evidence from Europe and Central Asia

AbstractWe use Bayesian model averaging techniques to assess the role of different types of structural and institutional variables and their interaction with specific characteristics of the economy, as determinants of employment dynamics for 30 economies in Europe and Central Asia. We find that, once short‐run dynamics are controlled for, common structural determinants for the employment rate emerge, including tax rates, human capital, availability of technology, labour market regulation and trade openness. The results show that the effect of labour market regulation on employment outcomes is affected by other characteristics, such as trade openness. Focusing on the trade–labour link, we find that labour market reforms toward a more flexible labour market have a positive impact on employment ratios, and this effect is stronger for economies characterised by relatively low level of trade barriers. In addition, the positive employment effects from labour market regulation reforms are stronger; the less flexible is the initial labour market regulatory framework. These findings bring important policy insights related to the employment potential of further structural reforms and trade integration for the countries in the region.

Does Competition Spur Innovation in North Africa? Evidence from a Panel ARDL Approach

The launch of the African Continental Free Trade Area at the beginning of 2021 provides new opportunities for North African countries to boost their economies. To conquer this vast market, innovation has become an ineluctable need. Although competition policy may serve as a salient lever for enhancing innovation, it is still not well harnessed by North African economies, even though they have one of the oldest competition law regimes on the African continent. For this purpose, this article attempts to explore the relationship between competition and innovation in four North African countries from 1995 to 2019. The second generation of panel unit root and cointegration tests have been used in our study. Based on the estimations of the panel autoregressive distributed lag model, our findings show that competition positively impacts innovation in the long run. Furthermore, our empirical results demonstrate that innovation is positively affected by economic growth and financial development while negatively affected by human capital and trade openness in the long run. The causality analysis reveals a unidirectional causal relationship running from competition to innovation. JEL Classification C32, C33, K21, O30

Reinvestigating the environmental Kuznets curve (EKC) of carbon emissions and ecological footprint in 147 countries: a matter of trade protectionism

Environmental degradation has profoundly impacted both human society and ecosystems. The environmental Kuznets curve (EKC) illuminates the intricate relationship between economic growth and environmental decline. However, the recent surge in trade protectionism has heightened global economic uncertainties, posing a severe threat to global environmental sustainability. This research aims to investigate the intricate pathways through which trade protection, assessed by available trade openness data, influences the nexus between economic growth and environmental degradation. Leveraging comprehensive global panel data spanning 147 countries from 1995 to 2018, this study meticulously examines the non-linear dynamics among trade, economy, and the environment, with a particular emphasis on validating the EKC hypothesis. This study encompasses exhaustive global and panel data regressions categorized across four income groups. The research substantiates the validity of the EKC hypothesis within the confines of this investigation. As income levels rise, the impact of economic growth on environmental degradation initially intensifies before displaying a diminishing trend. Additionally, trade protection manifests as a detriment to improving global environmental quality. The ramifications of trade protectionism display nuanced variations across income strata. In high-income nations, trade protection appears to contribute to mitigating environmental degradation. Conversely, within other income brackets, the stimulating effect of trade protection on environmental pressure is more conspicuous. In other words, trade protectionism exacerbates environmental degradation, particularly affecting lower-income countries, aligning with the concept of pollution havens. The study’s results illuminate nuanced thresholds in the relationship between trade, economic growth, and environmental degradation across income groups, emphasizing the heterogeneous impact and underlying mechanisms. These findings provide valuable insights for policymakers, urging collaborative efforts among nations to achieve a harmonious balance between economic advancement and environmental preservation on a global scale.

Linkages between ICT diffusion, renewable energy consumption, and carbon emissions: a comparative analysis of SAARC, MENA, and OECD countries.

This paper examines the linkages between information and communication technology (ICT) diffusion, renewable energy consumption (REC), and carbon (CO2) emissions across three distinct regions: the South Asian Association for Regional Cooperation (SAARC), Middle East and North Africa (MENA), and Organization for Economic Cooperation and Development (OECD) nations. We explore the causal pathways linking these variables and perform a comparative assessment of region-specific patterns with their policy implications. Utilizing a panel dataset of 28 countries from 1998 to 2019, we employ panel ARDL, FMOLS, DOLS, and D-H causality tests. The comprehensive analysis of the sample reveals that ICT development enhances CO2 emissions, whereas REC reduces emissions. However, the comparative analysis suggests a positive linkage between ICT diffusion and CO2 emissions in MENA and OECD countries but a negative linkage in SAARC countries. Further, REC substantially reduces emissions in MENA and OECD countries but has an insignificant effect in SAARC countries. Our findings corroborate the first-order effect of ICT (negative environmental impact) in MENA and OECD countries, with contextual variations attributed to economic structure, financial sector growth, trade openness, and industrialization. These findings offer pivotal insights for policymakers to leverage ICT capabilities and REC to attain sustainable development and mitigate climate change consequences.

Asymmetric effects of foreign direct investment and trade openness on economic growth in Somalia: Evidence from a non-linear ARDL approach

Asymmetric effects of foreign direct investment and trade openness on economic growth in Somalia: Evidence from a non-linear ARDL approach

Effects of public infrastructural development and industrialization on economic complexity in Africa: Emerging insight from panel data analysis

AbstractThis study examined the effects of public infrastructural development and industrialization on economic complexity in Africa, and how industrialization is moderating the effect of public infrastructural development on economic complexity. The study adopted the pooled ordinary least squares, the dynamic system generalized method of moments and the dynamic bias‐corrected least squares dummy variable estimators with a panel of 34 African economies over the period 2010–2021. The findings revealed that public infrastructural development and industrialization contribute positively and significantly toward enhancing economic complexity in Africa. We also found that industrialization substantially moderates and enhances the influence of public infrastructural development on economic complexity. Furthermore, the results show that trade openness, foreign direct investment inflow, international tourism arrival and institutional quality are potent factors enhancing Africa's economic complexity, while the role of human capital remains muted. These findings suggest that African leaders and policy‐makers can foster economic complexity across the continent by embracing policies that prioritize increased infrastructural development, industrialization, trade openness and foreign direct investment inflow while improving the quality of institutions within the region.

An Empirical Analysis on the Effect of IP Protection on Economic Growth in Shenzhen

This research paper examines the relationship between intellectual property (IP) protection and economic growth, with a specific focus on Shenzhen from 2014 to 2020. The study investigates the effect of IP protection measures, the combined effect of IP protection and investment, and the combined effect of IP protection and workforce on the total output. Previous literature has highlighted the positive influence of IP protection on economic growth in developed regions, but its impact in transitioning economies, like Shenzhen, remains less explored. Using a linear regression model, this research aims to provide insights into the interplay between IP protection, fixed investment, workforce size, and trade openness in the context of Shenzhen's economic development during the period under study. This will further clarify the connection of IPR to economic growth in a transitioning economy.

Study on the Impact of RMB Exchange Rate on China's Industrial Structure Adjustment

This paper firstly summarizes the current situation of China's current industrial structure as well as the change of exchange rate system, systematically describes the research object of this paper, and outlines its main features. After that, this paper analyzes the impact of the real effective exchange rate of RMB on China's secondary and tertiary industries for the purpose of the study, takes into full consideration the main factors affecting the industrial structure, selects a large number of control variables, and completes the empirical analysis of China's overall as well as the eastern, middle and western regions by using the panel data of the country's 30 provinces in the 16-year period from 2005 to 2020. In addition, a variety of robustness tests were conducted to fully ensure the stability and interpretability of the model. It is finally concluded that the appreciation of RMB exchange rate will significantly benefit the development of China's tertiary industry, promote the industrial structure from the secondary industry to the tertiary industry, and complete the upgrade of industrial structure. Specifically, for every 1% increase in the real effective exchange rate of RMB, the proportion of tertiary industry in the GDP of the whole country, the east, the center and the west will increase by 0.7850%, 0.7171%, 1.0186% and 0.4873% respectively. Besides, this paper also verifies the indirect impact of the exchange rate on the industrial structure through the three paths of price effect, foreign trade openness and FDI, and verifies the existence of the intermediary effect. According to the empirical results, the price effect, FDI, and the increase of foreign trade openness will promote the advanced industrial structure of China. But both FDI and foreign trade openness are negatively correlated with the exchange rate, which is the core variable of this paper.