DYNAMIC PANEL ANALYSIS OF THE RELATIONSHIP BETWEEN HIGH-TECHNOLOGY EXPORTS AND ECONOMIC WELL-BEING OF EXPORTING COUNTRIES
DYNAMIC PANEL ANALYSIS OF THE RELATIONSHIP BETWEEN HIGH-TECHNOLOGY EXPORTS AND ECONOMIC WELL-BEING OF EXPORTING COUNTRIES

Summary/Abstract: This research aims to analyze the relationship between economic well-being of exporting countries and high-technology exports using the panel data of 59 countries while controlling for the impact of the foreign direct investments. The observed period is between 1992 and 2015. Models are initially estimated using linear static panel data estimators. Moreover, previous studies indicate possible reverse causality relationship between economic terms of interest. Therefore, Granger causality test is used for this purpose. In addition, human development index (proxy variable of economic well-being of exporting countries) and high-technology exports are believed to be dynamic. This is why, linear dynamic panel data models based on GMM are employed to account for a dynamic phenomenon of the variables of interest. The obtained results of linear static panel data estimators indicate a significant positive impact of high-technology exports on human development index in both original and extended model that controls for the impact of foreign direct investments. Moreover, DH Granger non-causality test results indicate a bidirectional relationship between economic terms of interest. Results of two-step GMM estimator indicate a significant positive impact of high-technology exports on human development index in both original and extended model. In the case when possible estimation issues are not taken into consideration, regression coefficients are strongly overestimated. The results suggest that, the observed countries should foster the development of high-technology industry since this paper justifies the importance of high-technology exports as a driving force of economic well-being of exporting countries worldwide.

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