Technological and Economic Development of Economy

The impact of R&D efficiency on economic growth in China: non-linear threshold effects

Chang-Sheng Liao — 2024-07-09

This study uses a threshold estimation technique to examine whether the effect of R&D efficiency on economic growth in China differs according to the level of financial development. The results broadly confirm a nonlinear relationship between R&D efficiency and economic growth due to the dynamic and static threshold effects of financial development and R&D expenditure. This finding suggests that R&D efficiency does not significantly impact growth in the low and middle-financial development provinces at conventional levels. Hence, the benefit of R&D efficiency in China could stem from the positive effect of R&D in highly financially developed provinces. Though R&D efficiency is poor, R&D investment still enhances economic growth because the amount of R&D investment is enormous. This finding suggests that while it is most important to not unthinkingly expand R&D gross investment, it is also necessary to make full use of R&D investment by improving R&D efficiency.

First published online 29 May 2024

A model for construction sector development in middle-income sub-Saharan African countries

Jorge Lopes — 2024-07-09

Buildings and other constructed facilities form the essential framework of a country’s physical and economic infrastructure. Construction serves as a key capital input to production, driving economic growth and wealth generation. This impact can be particularly transformative in low-to-middle-income countries. Physical infrastructure, including construction, is a powerful engine of economic growth and is closely related to national economic performance. However, not all studies agree with the commonly held belief that construction investment has a positive impact on economic growth, particularly concerning the amount of investment and the relationship between construction investment and economic growth. So far, cross-country studies dealing with the construction sector-economic growth relationship have used indicators of national output and construction that are not strictly comparable between countries. This article reviews the main strands of the literature on the role that the construction sector plays in the national economy and economic development. It also uses novel data drawn from the “capital file” of the PENN World Table (version 10.1) to assess the development pattern of the construction sector in two groups of sub-Saharan African (SSA) countries on the middle-income status of economic development, for the period between 1990 and 2019. The study reveals that construction shares, measured as the proportion of gross fixed capital formation attributable to construction in the gross domestic product, revolve around a norm determined by the level of built assets preceding the reference period. The results of the study could have policy implications for the economic sustainability of the construction industry in SSA.

first published online 17 May 2024

Does technological progress promote or prevent trade conflict? Evidence from China

Qian Zhao — 2024-07-09

Using the bootstrap rolling-window subsample Granger causality test from China, this study analyses the influence of technological progress (TP) on trade conflict (TC). The results show that TP can both promote and prevent TC. In 2012 and 2018, TP led to more trade conflicts between China and its trading partners. This result proves the “trade-loss effect”, suggesting that TP in one country promotes TC by threatening other countries’ income. However, TP had a negative influence on TC in 2021 and 2022. This finding is consistent with the “welfare effect”, implying that TP can prevent TC by providing more high-quality and cheaper products for worldwide consumers. This study suggests that the government should adopt appropriate trade policies when encouraging TP to promote bilateral trade. Furthermore, firms should develop their own high-quality irreplaceable products through technological innovation to address TC risk.

First published online 22 March 2024

Sustainable digital transformation: the nexus between ICT and global green economic growth

Yiwen Li — 2024-07-09

As a new engine to promote global economic and social development, information and communication technology (ICT) plays a key role in the field of modern economy. The aim of this paper is to investigate the nexus between ICT and green total factor productivity (GTFP) on a global scale. An extended data envelopment analysis model (DEA), named WINDOWS-US-SBM, was constructed for calculating the GTFP of 65 countries from 2007 to 2019. This paper empirically analyzes the spatial effect and the transmission mechanism of ICT development on GTFP in countries from different income groups. The results show a prominent imbalance between ICT development and GTFP in various countries. ICT can effectively improve GTFP and play a crucial role in lower middle-income countries. The development of ICT can improve GTFP through technological progress, energy intensity, and trade openness. This paper is helpful to provide policy guidance for the development of ICT and give a new perspective of global green development.

First published online 20 May 2024

Bitcoin price and Chinese green bonds: evidence from the QARDL method

Kai-Hua Wang — 2024-07-09

This article primally explores the short-term fluctuation and long-term implications of the international Bitcoin price (BP) on the Chinese green bond (GB) market, within the sample period of 2014:M10–2023:M07. Bitcoin is the most important cryptocurrency and has a carbon-intensive feature, and its price suffers from great volatility and is closely related to the green finance market. Meanwhile, although China is the largest bitcoin mining state, it is pursuing a dual carbon target, which promotes its green bond market’s development. Thus, it is valuable to investigate the influence of BP on GBs in China. Based on the quantile autoregressive distributed lag approach, this paper indicates that the positive and negative impacts of BP on the GB market are significant in the long-term but not apparent in the short-term. These results emphasize the importance for market participants to obtain a better understanding of how BP affects GB under various market circumstances. Implementing specific policies, such as regulatory mechanisms for Bitcoin trade, market-oriented reform for the bond market, and information disclosure, can alleviate shocks from BP and accelerate the development of the GB market.

First published online 20 May 2024

Robot adoption and urban total factor productivity: evidence from China

Bowen Li — 2024-07-09

Industrial robots are having a profound and lasting impact on China’s economy. This research examines the deployment of industrial robots and their effects on urban total factor production from theoretical and empirical angles. It is created using panel data from 286 cities at the prefecture level between 2003 and 2017. It is found that: First, robot adoption promotes urban total factor productivity. Second, adopting robots has a more positive influence on urban total factor productivity development in western, underdeveloped, and less market-oriented areas compared to the developed and market-oriented areas in the east. Third, adopting robots could enhance urban innovation vitality, increase total factor productivity, boost industrial agglomeration, and improve technological progress or technical efficiency. Policy enlightenment provided by these findings can guide future technological advancements and promote high-quality city development.

First published online 07 June 2024

Information as a consumer protection instrument on the consumer credit market

Iwona Dorota Czechowska — 2024-07-09

The aim of the article was to assess the opinions of consumer credit borrowers on the information message provided to them by lenders at the pre-contractual stage. The opinions were presented in the context of the demographic characteristics of the respondents.
The research question posed was whether, taking into account demographic characteristics, the assessment of consumer credit borrowers regarding the information message obtained at the pre-contractual stage varied. The research methodology included a questionnaire and Computer-Assisted Telephone Interviewing (CATI). For the information analysis, we employed the following non-parametric tests: the chi-square test of independence, the Mann–Whitney U test and the Kruskal–Wallis H test. No significant differences were observed in all the parameters of the assessment of the information message, which means that the answer to the research question was negative. The findings suggest that even though borrowers may positively assess the compliance with the information obligations by lenders, it does not mean that all credit decisions made were rational and appropriate to their financial situation. Our study focused on the consumer protection and employed non-parametric tests to analyze the consumer credit borrowers’ assessment of the information provided to them by lenders.

First published online 07 June 2024

Were the manufacturing companies resilient in the face of COVID-19 or did they take advantage?

Claudia Diana Sabău-Popa — 2024-07-09

The research paper aims to build a composite index of the financial performance of companies, to find if the impact of the COVID-19 crisis was significantly positive for most manufacturing companies listed on Bucharest Stock Exchange, and to look if the manufacturing companies were resilient being prepared with savings that could have mitigate the effects of this pandemic crisis. The results of the FE model selected show that 31.67% of the company’s equity variation is justified by the two independent variables, the stronger correlation of equity being with reserves. Based on the composite index of financial performance built, the manufacturing companies were grouped in three clusters: a cluster with low financial performance companies (z < 4), a cluster with good financial performance companies (4 ≤ z ≤ 8) and a cluster with high financial performance companies (z > 8). The third cluster groups the most analysed companies, on which the pandemic crisis had a positive impact, which achieved the highest financial performance; they are those companies that “take advantage” from the COVID-19 crisis, adapting their business strategy to the market conditions imposed. The article adds value to the specialty literature by building the financial performance’s composite indicator, clustering the manufacturing companies by financial performance’ Z-score.

Interconnections and interdependencies of economic development and shadow banking sector in developing and transitional economies

Yao Liang — 2024-07-09

The research objective is defined as the identification and confirmation of empirical relationships between shadow banking activities and economic development in developing and transitional economies to establish a theoretical basis for minimizing potential risks associated with shadow banking. The methodological design is based on a quantitative approach, implemented through correlation-regression analysis and ARIMA forecasting methods. The research findings confirm Hypothesis 1: China’s shadow banking is closely interconnected with the country’s economic development. However, Hypothesis 2 (the reduction of shadow banking in China contributes to per capita GDP growth) is only supported for specific structural elements of shadow banking that contribute to economic overheating. In contrast, for other structural elements, such as entrusted loans, a strong direct correlation exists, promoting a positive impact of shadow banking on the country’s economic development. This highlights the need for a highly balanced state policy to minimize shadow banking risks. The research results can be valuable for professionals in public administration and academic researchers, particularly in terms of shaping future research directions.

Measuring the technological competitiveness of economies with the PTCE method: PRC vs. USA 2000–2020

Adam Woźnicki — 2024-07-11

The relationship between China (PRC) and the United States (USA) has reached an unprecedented level of tension, mainly due to economic and technological rivalry. This study introduces an original quantitative method, the Pentagon of Technological Competitiveness of Economy (PTCE) to measure the technological competitiveness of both countries from 2000 to 2020. The findings reveal that while the USA remains a global technological leader, the PRC is emerging as a formidable challenger. Although the USA still holds the lead, signs of decline are visible, while the PRC exhibits a remarkable upward trajectory in technological competitiveness. The findings provide actionable recommendations for policymakers. To reinforce its position as the unrivaled technological leader, the USA should prioritize enhancing capabilities in areas such as patents, scientific articles and the export of high technology and STEM-related products. For the PRC there is an unprecedented opportunity to surpass the USA in technological leadership by strategic investments in research, innovation and human capital development. The novelty of this research lies in two main areas: (i) its significant contribution to competitiveness analysis through the introduction of the PTCE method and (ii) its provision of a comprehensive assessment of the shifting technological dynamics between the USA and the PRC.

Nexus between country governance, globalization, sustainable development policy, fair trade and economic sustainability: a mediation-moderation approach

Hanning Wang — 2024-08-27

Sustainable development of the economy is the goal of every country in the world. The economic growth of China is accepted worldwide, but the Chinese economy also suffers from an economic crisis. The role of the Chinese government is important for chinses businesses and the economic sustainability of the country. The theoretical framework of this study is designed to determine the impact of globalization and sustainable development policy on fair trade and economic sustainability in China. A questionnaire based on Likert scale were employed with a random sampling technique to collect the cross-sectional data for this research and 1094 responses were collected at the rate of 55%. AMOS statistics tool was employed for the findings of this study based on a research questionnaire. The research concludes that globalization and sustainable development policy have a significant impact on fair trade and economic sustainability in China. This study introduced a new framework related to economic sustainability in the body of knowledge. The theoretical and practical implications of this study have significance for literature and practitioners in China to achieve sustainability in the economy. The research is novel as it highlighted the importance of globalization and sustainable development policy for fair trade and economic development in China. Accordingly, it would be helpful for the policy makers to have reliable decisions for sustainable development and promotion of fair trade.

Do financial inclusion and bank competition matter for banks’ stability in Asia?

Wanying Song — 2024-08-27

This study investigates the effect of financial inclusion (FI), considering micro and macro indicators as well as micro- and macro-FI separately, on the stability of Asian banks and examines the moderating effect of bank competition (BC) on this relationship. Using data from 2011 to 2021, this study examines the relationship between FI, BC, and bank stability (BS). The hypotheses were tested using a “two-step system-GMM framework”. The findings were also authenticated using the panel OLS approach. The results indicate that FI (considering micro- and macro-indicators) and micro- and macroFI have significant positive effects on the stability of Asian banks. However, the impact of micro-FI is greater than that of macro-FI on the BS in Asia. Furthermore, the results manifest that BC has a significant positive impact on BS and positively moderates the relationship between micro-FI and BS, whereas it negatively moderates the relationship between macro-FI and BS. The findings of this study have practical implications for regulators, bankers, and policymakers involved in formulating strategies to enhance Asian banks’ stability.

Modeling and significance assessment of road construction participant and user benefits using expert evaluation methods

Henrikas Sivilevičius — 2024-09-12

Human activities are related to obtain economic, technical, social and environmental benefits. The road construction process participants and road users have direct or indirect benefits from elaboration of new infrastructure. The number of the benefits received by individual entities is publicly discussed by politicians, lobbyists, experts and other decision-makers without having quantitative estimates of benefits, i.e., often relying on intuition or considering theoretical reasoning. The paper suggests a system of 19 benefit entities (criteria) assigned the ranks given by experts. The study involved three categories of experts, including 35 road engineers, 36 transport engineers and 61 road users. The values of the concordance coefficients obtained as a result of the conducted research were found significantly higher than critical values and showed that the opinions of the experts in each category were consistent (not contradictory). This made it possible to consider the average of the opinions of the expert group as a reliable result of solving the problem. Rank averages were replaced by the normalized weights of criteria using Average Rank Transformation into Weight-Linear (ARTIW-L) and – Nonlinear (ARTIW-N) methods. The global averages of criterion weights were used employing the Inverse Hierarchy for Assessment Main Criteria Importance (IHAMCI) method thus calculating the normalized weights of the road-related classified entities (three main criteria). The findings prove that road users benefit the most (weight 0.3485), the road construction contractor (weight 0.3325) is in the next position and the road owner (investor) takes the weight equal to 0.3190. The generated research data can be used for justifying the rationality of road investment.

The impact of digitalization and economic diversification on economic growth: evidence from Saudi Arabia

Mohamed Neffati — 2024-09-19

The present study aims to assess the impact of economic diversification and digitalization on economic growth in Saudi Arabia during the period 1990–2021. We have looked into this relationship in both the overall economic and non-oil economic sectors using the autoregressive distributed lag (ARDL) cointegration approach. The empirical results offer compelling evidence that economic diversification and digitization affect economic growth both directly and indirectly through their effects on non-oil GDP growth. The findings indicate that there is a long-run dynamic between economic growth, economic diversification, and digitalization. In the long run, digitalization contributes to the progress of non-oil economic growth and, therefore, sustainable economic growth. In addition, the causality test revealed that economic diversification develops the economy of new knowledge, which reinforces economic diversification, and non-oil economic growth supports digitalization. Consequently, digitalization played an important role in the Kingdom’s economic transition toward economic diversification. Indeed, our results prove that digitalization increases non-oil income and then reduces the supremacy of the oil sector in the economy, which promotes economic diversification. The KSA authority must accelerate the energetic transition process in order to support economic diversification and attract more foreign investment in information and communication technologies (ICTs).

Performance evaluation of sustainable energy alternatives to obtain efficient hybrid energy investments

Hasan Dinçer — 2024-09-24

This study evaluates the synergy of coalition for hybrid renewable energy (RWB) system alternatives. In this context, the alternative sources of hybrid RWB system are examined to illustrate the impact-relation directions among them with multi SWARA based on q-ROFs and golden cut. Next, the performances of renewable alternatives are measured in terms of the synergy of coalition with game theory and Shapley value. It is concluded that solar energy is the most suitable RWB alternative for synergy to increase efficiency in investments. However, biomass does not have a significant influence on providing synergy in energy investments. Therefore, solar energy should be prioritized for hybrid energy investments. Especially with the effect of technological developments, the efficiency of solar energy investments increases significantly. Thus, solar energy investments have become quite suitable for increasing the synergy in hybrid energy projects. Furthermore, necessary research should be conducted to make biomass energy more efficient.