Structuralists consider that availability of infrastructure plays important role in markets connectivity and trade promotion while the lack of infrastructure disrupts markets and retards trade. Infrastructure makes a huge difference in the process of development and the comparative edge of an economy, particularly in trade (Ahmad et al. 2015; Anderson and Wincoop 2003). Researchers estimated that poor infrastructure penalize international trade (Donaubauer et al. 2018; Yeaple and Golub 2002). Countries with better infrastructure (such as Singapore and Hong Kong) perform well in international trade and punch above their weight while countries with weak infrastructure (such as Bhutan and Pakistan) perform poor on external sector

This research, by using the autoregressive distributive lag method, examines the long- and short-term causal relationship between infrastructure and exports in Pakistan over the period 1990–2017. The empirical results revealed the existence of short- and long-term bi-directional causality concerning infrastructure and export in Pakistan. The results demonstrated that infrastructure strongly improves export in the short and long run. Conversely, export encourages the quality and availability of infrastructure in Pakistan in the long run. Furthermore, this study also uses sub-indices of infrastructure individually as dependent and independent variables. The study result demonstrated that the long- and short-term effects of infrastructure and its sub-indices (transport, electricity, communication, finance) on export is positive and significant. Also, when infrastructure sub-indices are used as dependent variables, the results indicate that the effect of export on sub-indices is positive and significant in the long run; however, in the short run, it is insignificant. The bi-directional linkage between infrastructure and export suggests that improving the quality and increasing the availability of infrastructure would enable Pakistan’s economy to catch up with the advanced economies, specifically in export. Furthermore, control variables of per-capita GDP, exchange rates, human capital, and domestic spending also expand the bi-directional causal relationship between Pakistan’s infrastructure and exports.

Purpose Over the past two decades, China’s outward foreign direct investment (OFDI) has risen remarkably. Whether such an increase affects the Chinese export diversification (ED) is a significant issue that has surprisingly remained unaddressed. This study aims to explain this issue that how OFDI plays a vital role in symmetric and asymmetric effects on its ED. Design/methodology/approach The authors introduce a robust nonlinear autoregressive distributed lag (NARDL) model. Ironically, the purpose of this study is to analyze the symmetric and asymmetric effect of OFDI on ED. Findings The authors propose that growing OFDI would be more advantageous to China, rather than the policies of contraction. Therefore, the study provides valuable policy insights to consider the long-run asymmetric momentum given to ED by China’s OFDI. Originality/value The results of this study may seem to be an important newsletter for further policy discussion on how China can catch up on the benefits of ED through OFDI.

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PurposeChina's outward foreign direct investment (OFDI) has risen remarkably over the past two decades. Does such increase affect the sophistication of Chinese exports, is a significant issue that has surprisingly remained unaddressed? The purpose of this study is to investigate the impact of Chinese OFDI on bilateral export sophistication of China and its OFDI receiving partner countries during 2003–2017 by applying Poisson pseudo-maximum likelihood approach based on gravity model.Design/methodology/approachThe analysis has been performed for total sample, region-wise grouped sample (Europe and Central Asia, Middle East and North Africa, Latin America and Caribbean, East Asia and Pacific, South Asia, North America and sub-Saharan Africa) and income-wise grouped sample (high income, upper middle income, lower middle income and lower income group sample).FindingsThe results confirmed the significant and positive effect of Chinese OFDI on bilateral export sophistication in total sample, regions-wise and income groups sample.Originality/valueThe study provides a helpful suggestion regarding policy towards achieving more sophistication in export and thus to achieve comparative advantage in trade.