Foreign direct investment, information and communication technology, trade, and economic growth in the South Asian Association for Regional Cooperation countries: An empirical insight

Abstract

Information and communication technology (ICT) is one of the key sectors promoting economic growth in the present modern era of globalization. It promotes technological advances in global communications as well as production techniques and contributes to economic growth and development. Most of the economic activities, including international trade and foreign direct investment (FDI), are largely dependent on various modern sources of ICT. The objective of this study is to examine the dynamic relationship between FDI, ICT, trade, and per capita gross domestic product growth across the South Asian Association for Regional Cooperation (SAARC) developing nations from 2000 to 2017. We have used different panel estimates such as fully modified ordinary least squares, dynamic ordinary least squares, Fisher–Johansen cointegration test, panel autoregressive distributed lag, and Dumitrescu–Hurlin causality. We found existence of unidirectional causality from FDI to ICT and bidirectional causal relationship between trade and ICT. The outcome of our study suggests policy recommendations for improving the standards of ICT, specifically focusing on economic growth, trade openness, and facilitation of foreign investment in the SAARC countries.

Has the Internet increased FDI, economic growth, and trade? Evidence from Asian economies

“…They explain that in developed countries, the improvement in ICT causes an increase in FDI; however, in developing countries, the causality direction runs from FDI to ICT. Bhujabal and Sethi (2019) investigated the dynamic links between ICT, FDI, trade, and GDP by applying various panel estimates. They provided evidence of a long term relationship between FDI and other variables.…”

“…Most of these studies have shown that FDI and international trade increase as the Internet use rate increases (Choi, 2003; Ko, 2007; Tay, 2015; Yousefi, 2018), while other studies acknowledge that the growth in trade and FDI stimulates Internet use (Ketteni et al, 2015; Shirazi et al, 2010). In addition, some scholars identify a two-way causal relationship between the Internet and FDI (Gholemi et al, 2006; Leitão and Baptista, 2011), and between trade and the Internet (Bhujabal and Sethi, 2019). However, very few studies have combined the Internet with economic factors (e.g., FDI, imports, exports, and GDP) in a panel vector autoregressive (VAR) model that focuses on Asia.…”

Is Sustainable Economic Development Possible Thanks to the Deployment of ICT?

“…From a more academic point of view, it is possible to find researchers who stress the importance of ICT to achieve sustainable growth objectives. For example, Bhujabal & Sethi (2019) [31] (pp. 1-2) point out a number of benefits derived from ICT, among which we highlight: (a) global integration, which allows developing countries to adopt and benefit from the technologies of developed countries, (b) the ability of these technologies to overcome both geographical and cultural barriers, which promotes convergence between advanced and non-advanced economies, (c) promotion of government transparency by reducing corruption, and (d) access to new opportunities and information for the population.…”

Effect of Foreign Direct Investment on Bilateral Trade: Experience From Asian Emerging Economies

“…Le (2017) showed similar results in his study on Vietnam’s trade inflow of FDI. Afterward, the literature regarding FDI has an essential and leading role in the expansion of developed and developing economies (Bhujabal, 2019). FDI occurs when an investor of one country (home country) has acquired an asset in another country (host country), intending to manage the acquired asset (World Trade Organization, 1996).…”