Economic output and high-technology export: panel causality analysis

Abstract

High-technology export is expected to have a positive impact on economic output since it is supposed to have a positive impact on job growth. The relationship between export and economic growth, as well as the relationship between foreign direct investments, export and economic growth has been a popular issue of debate in up-to-date studies. However, empirical evidence treating the direct causality between high-technology export and economic output is lacking. Therefore, this article aims to fill in this gap by providing new evidence on the relationship between aforementioned economic terms. The relevance of high-technology export on economic output is explored in three panels. The first overall panel contains 70 economies; the second contains 32 developed economies, while the third panel contains 38 developing economies over the period 1995-2015. A Granger causality test that implements a vector autoregressive (VAR) framework within the panel setting is employed. Besides this, cointegration test is applied. In order to test for the sensitivity of the results and to avoid robust errors, we employ a panel ARDL model. The findings of ARDL model indicate that there is a short- as well as long-run relationship between high-technology export and economic output in the original model in overall sample of countries as well as for developed and developing. These results are confirmed in the extended model that controls for the impact of foreign direct investments. Cointegration test reports cointegrating relationship between high-technology export and economic output. Granger causality test indicates a bidirectional relationship between economic terms of interest.