The Impact of Digitalization and Trade Openness on Economic Growth: New Evidence from Richest Asian Countries

Bakari, Sayef and El Weriemmi, Malek and Mabrouki, Mohamed (2022): The Impact of Digitalization and Trade Openness on Economic Growth: New Evidence from Richest Asian Countries.

Abstract

The aim of this investigation is to check the impact of digitalization and trade openness on economic growth for top ten richest Asian countries. Static Gravity Model and Generalized Method of Moments Model were estimated. We found that digitalization and trade openness have a significant positive effect on economic growth. These results prove that trade openness and digitalization is a source of economic growth for richest Asian countries. Due to the magnitude of the positive externalities attached to the trade openness and digitalization, in terms of technology transfer bias, financial capacities, economic policies, human expertise, plenty of natural resources, large markets size, and spillover effect added to the domestic capacities and the national investment, the pace of the phenomenal economic performance of the Asian economies is very well marked.

• Item Type: MPRA Paper
• Language: English
• Keywords: Digitalization, Trade Openness, Economic Growth, Richest Asian Countries.
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity; F - International Economics > F1 - Trade > F10 - General; F - International Economics > F1 - Trade > F11 - Neoclassical Models of Trade; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O53 - Asia including Middle East

References

Ahmad, J. and Kwan, A.C.C. (1991). Causality between Exports and Economic Growth. Economic Letter. 37, 243-248

Bakari, S. (2016). Impact of Exports and Imports on Economic Growth in Canada: Empirical Analysis Based on Causality (No. 75910). University Library of Munich, Germany. https://mpra.ub.uni-muenchen.de/75910/

Bakari, S. (2017a). Trade and Economic Growth in Germany (No. 77404). University Library of Munich, Germany. https://mpra.ub.uni-muenchen.de/77404/

Bakari, S. (2017b). The Nexus between Export, Import, Domestic Investment and Economic Growth in Japan (No. 76110). University Library of Munich, Germany. https://mpra.ub.uni-muenchen.de/76110/

Bakari, S. (2017c). The Impact of Vegetables Exports on Economic Growth in Tunisia. Economic Research Guardian, 7(2), 72-87. http://www.ecrg-journal.com/archive2017.html

Bakari, S. (2018a). The impact of citrus exports on economic growth: Empirical analysis from Tunisia. International Journal of Food and Agricultural Economics (IJFAEC), 6(1128-2019-539), 95-112. https://ageconsearch.umn.edu/record/283764/

Bakari, S. (2018b). The Three-Way Linkages between Export, Import and Economic Growth: New Evidence from Tunisia. Journal of Smart Economic Growth, 2(3), 13-53. https://jseg.ro/index.php/jseg/article/view/24

Bakari, S. (2020). The impact of olive oil exports on economic growth: Empirical analysis from Tunisia. BİLTÜRK Journal of Economics and Related Studies, 2(3), 441-458. https://dergipark.org.tr/en/pub/bilturk/article/675714

Bakari, S. (2021a). Are Domestic Investments in Spain a Source of Economic Growth? (No. 105526). University Library of Munich, Germany. https://mpra.ub.uni-muenchen.de/105526/

Bakari, S. (2021b). Innovation and Economic Growth: Does Internet Matter? BILTURK, The Journal of Economics and Related Studies, 3(2), 109‐116. https://dergipark.org.tr/en/pub/bilturk/issue/62202/706165

Bakari, S. (2021c). The Nexus between Domestic Investment and Economic Growth in G7 Countries. Does Internet Matter? Journal of Applied Economic Sciences, Volume XVI, Summer, 2(72): 239– 240. https://www.ceeol.com/search/article-detail?id=984111

Bakari, S & Fakraoui, N & Tiba, S (2019). Domestic Investment, Export, Import and Economic Growth in Brazil: An Application of Vector Error Correction Model. MPRA Paper No. 95474, University Library of Munich, Germany. https://mpra.ub.uni-muenchen.de/95528/

Bakari, S., & Mabrouki, M. (2017). Impact of exports and imports on economic growth: new evidence from Panama. Journal of Smart Economic Growth, 2(1), 67-79. https://jseg.ro/index.php/jseg/article/view/70

Bakari, S., & Mabrouki, M. (2018). The Impact of Agricultural Trade on Economic Growth in North Africa: Econometric Analysis by Static Gravity Model (No. 85116). University Library of Munich, Germany. https://mpra.ub.uni-muenchen.de/85116/

Bakari, S., Mabrouki, M., & Elmakki, A. (2018a). The Nexus between Industrial Exports and Economic Growth in Tunisia: Empirical Analysis. Journal of Smart Economic Growth, 3(2), 31-53. https://jseg.ro/index.php/jseg/article/view/44

Bakari, S., Mabrouki, M., & Elmakki, A. (2018b). The Impact of Domestic Investment in the Industrial Sector on Economic Growth with Partial Openness: Evidence from Tunisia''. Economics Bulletin, 38(1), 111-128. https://ideas.repec.org/a/ebl/ecbull/eb-17-00690.html

Bakari, S., & Tiba, S. (2019a). The Impact of Trade Openness, Foreign Direct Investment and Domestic Investment on Economic Growth: New Evidence from Asian Developing Countries. Economic Research Guardian, 9(1), 46-54. http://www.ecrg-journal.com/archive2019.html

Bakari, S., & Tiba, S. (2019b). Long run and Short run Macroeconomics Determinants of Economic Growth in the USA: Cointegration and VECM Analysis (No. 96618). University Library of Munich, Germany. https://mpra.ub.uni-muenchen.de/96618/

Bakari, S., Tiba, S. 2020. The Impact of Internet on Economic Growth in North Africa: New Empirical and Policy Analysis. Journal of Applied Economic Sciences, Volume XV, Fall, 3(69): 605-616. https://www.ceeol.com/search/article-detail?id=909723

Bakari, S & Tiba, S & Mabrouki, M (2020). "An Exploratory Study of the Causality between Internet Use, Innovation, and Economic Growth in Tunisia: An indispensable Case Analysis," MPRA Paper 100610, University Library of Munich, Germany. https://mpra.ub.uni-muenchen.de/100610/

Balassa, B., 1995. Export, Policy Choices and Economic Growth in Developing Countries after the 1973 Oil Shock. Journal of Development Economics, vol. 18.pp. 23-35.

Bouchoucha, N., & Bakari, S. (2021). The Impacts of Domestic and Foreign Direct Investments on Economic Growth: Fresh Evidence from Tunisia. Journal of Smart Economic Growth, 6(1), 83-102. https://ideas.repec.org/a/seg/012016/v6y2021i1p83-102.html

Choi, C., (2003). "Does the Internet stimulate inward foreign direct investment?" Journal of Policy Modeling 25 (4), 319-326.

Choi, C. and M. H. Yi (2009). The effect of the Internet on economic growth: Evidence from cross‐country panel data. Economics Letters, 105, 39‐41. https://doi.org/10.1016/j.econlet.2009.03.028

Choi, C., & Yi, M. H. (2017). "The internet, R&D expenditure and economic growth". Applied Economics Letters, 25(4), 264-267. http://dx.doi.org/10.1080/13504851.2017.1316819

Dahmani, M., Mabrouki, M., & Youssef, A. B. (2021). The ICT, Financial Development, Energy Consumption and Economic Growth Nexus in MENA Countries: Panel CS-ARDL Evidence (No. 2021-46). Groupe de Recherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.

Dahmani, M., Mabrouki, M., & Youssef, A. B. (2022a). The Information and Communication Technologies-Economic Growth Nexus in Tunisia: A Cross-Section Dynamic Panel Approach. Montenegrin Journal of Economics, 18(2), 155-168.

Dahmani, M., Mabrouki, M., & Ben Youssef, A. (2022b). ICT, trade openness and economic growth in Tunisia: what is going wrong? Economic Change and Restructuring, 1-20.

Duodu, E., Baidoo, S. T., & Lau, E. (2020). How does quality of institutions affect the impact of trade openness on economic growth of Ghana? Cogent Economics & Finance, 8(1), 1812258. https://doi.org/10.1080/23322039.2020.1812258

Fakraoui, N., & Bakari, S. (2019). Tie Among Domestic Investment, Exports and Economic Growth: Empirical Analysis from India. Journal of Smart Economic Growth, 4(1), 1-15. https://jseg.ro/index.php/jseg/article/view/55

Felbermayr, G., Prat, J., Schmerer, H.J., (2011). Trade and unemployment: what do the data say? European Economic Review. 55(6):741–758

Frankel, J., Romer, D., 1999. Does trade cause growth? American Economic Review 89 (3), 379–399.

Fosu, A., (1990). Exports and Economic Growth: The African Case. World Development, vol. 18, 31-35.

Hansen, L.P., (1982). “Large Sample Properties of Generalized Method of Moments Estimators,” Econometrica, 50, 1029-1054.

Helleiner, G. K., (1986). Outward Orientation, Import Instability and African Economic Growth: An Empirical Investigation. In Theory and Reality in Development Essays in Honour of Paul Steeton Ed. S. Lall and F. Stewart, Macmilan, London.

Jin, L., & Jin, JC, (2014). "Internet education and economic growth: Evidence from cross- country regressions". Economies. 2014; 2(1): P. 78-94.

Kallal, R., Haddaji, A., & Ftiti, Z. (2021). ICT diffusion and economic growth: Evidence from the sectorial analysis of a periphery country. Technological Forecasting and Social Change, 162, 120403.

Kong, Q., Peng, D., Ni, Y., Jiang, X., & Wang, Z. (2020). Trade openness and economic growth quality of China: Empirical analysis using ARDL model. Finance research letters. https://doi.org/10.1016/j.frl.2020.101488

Lawal, A. I., Nwanji, T. I., Asaleye, A., & Ahmed, V. (2016). Economic growth, financial development and trade openness in Nigeria: An application of the ARDL bound testing approach. Cogent Economics & Finance, 4(1), 1258810. https://doi.org/10.1080/23322039.2016.1258810

Maurseth, P.B., (2018). "The effect of the Internet on economic growth: Counter-evidence from cross-country panel data". Economics Letters 172, 74-77.

Malefane, M. R. (2020). Trade Openness and Economic Growth in Botswana: Evidence from Cointegration and Error-Correction Modelling. Cogent Economics & Finance, 8, Article ID: 1783878. https://doi.org/10.1080/23322039.2020.1783878

Michaely, M., (1977), ‘Exports and Economic Growth: An Empirical Investigation’, Journal of Development Economics, Vol. 4, pp. 49–53.

Noh, Y.-H., & Yoo, K., (2008). "Internet, inequality and growth". Journal of Policy Modeling, 30(6), 1005-1016.

Nwadike, G. C., Johnmary, A. K., & Alamba, C. S. (2020). Impact of trade openness on Nigerian economic growth: An empirical investigation, 1970–2011. Foreign Trade Review, 55(2), 239–247. https://doi.org/10.1177/0015732519894153

Olubiyi, E. A. (2014). Trade, remittances and economic growth in Nigeria: Any causal relationship? African Development Review, 26(2), 274–285. https://doi.org/10.1111/1467-8268.12081

Pradhan, R. P., Bele, S., & Pandey, S., (2013). “Internet-growth nexus: evidence from cross country panel data” Applied Economics Letters, 20(16), 1511–1515.

Rahimi, M., & Rad, A.A., (2017), "Internet usage, electricity consumption and economic growth: Evidence from a panel of developing-8 countries". International Journal of Energy Economics and Policy, 7(3), 152-156.

Ram, R. (1987). Exports and Economic Growth in Developing Countries: Evidence from Time-series and Cross-section Data. Economic Development and Cultural Change, vol. 33, 415-425.

Rasoanomenjanahary, M. A., Cao, L., & Xi, Y. L. (2022). The Impact of Trade Openness on Economic Growth: Empirical Evidence from Madagascar. Modern Economy, 13, 629-650. https://doi.org/10.4236/me.2022.135034

Saidi, K and Mongi, C (20.18). The Effect of Education, R&D and ICT on Economic Growth in High Income Countries, Economics Bulletin, AccessEcon, 38(2), 810‐825.

Salahuddin, M., Tisdell, C.A., Burton, L. & Alam, K., (2015), “Social capital formation, internet usage and economic growth in Australia: evidence from time series data”, International Journal of Economics and Financial Issues, Vol. 5 No. 4, pp. 942-953.

Tang, V.T., Tregenna, F., Dikgang, J. (2019). Trade Openness and Economic Growth in Mauritius. In: Tang, V., Shaw, T., Holden, M. (eds) Development and Sustainable Growth of Mauritius. Contemporary African Political Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-96166-8_3

Tripathi, M and Inani, S.K (2016). Does internet affect economic growth in sub‐ Saharan Africa?', Economics Bulletin, AccessEcon, 36 (4), 1993‐2002.

Tyler, W., (1981). Growth and Exports Expansion in Developing Countries: Some Empirical Evidence. Journal of Development Studies, vol. 9, 121-130.

Ulasan, B., 2015, “Trade Openness and Economic Growth: Panel Evidence”, Applied Economics Letters, 22(2), 163-167.

Vlastou, I. (2010). Forcing Africa to open up to trade: Is it worth it?. The Journal of Developing Areas, 25-39. https://www.jstor.org/stable/41428192

Wang, Y., Cao, X., Sui, X., Zhao, W., 2019. How do black swan events go global? -evidence from US reserves effects on TOCOM gold futures prices. Finance Research Letters 31.

Zahonogo, P. (2016). Trade and economic growth in developing countries: Evidence from sub-Saharan Africa. Journal of African Trade, 3(1-2), 41-56. https://doi.org/10.1016/j.joat.2017.02.001

Zhang, D., Du, P., Chen, Y., 2019. Can designed financial systems drive out highly polluting firms ? an evaluation of an experimental economic policy. Finance Research Letters 31.

Zhang, D., Guo, Y., 2019. Financing R&D in Chinese private firms: business associations or political connection? Economic Modelling 79, 247-261.