Economies doi: 10.3390/economies14050192

Authors: Kulshara Madenova Faya Shulenbayeva Adaskhan Daribayeva Aisulu Kulmaganbetova

This article examines interregional differences in innovation development in Kazakhstan through the relationship between innovation resources and innovation-related economic outcomes. For an economy seeking diversification, higher productivity, and reduced dependence on raw materials, the key issue is not only the availability of innovation resources, but also the ability of regions to transform them into output, sales, and broader economic effects. Using official regional statistics for 2024, the study compares two groups of indicators: innovation resources and innovation-related economic outcomes. To improve the reproducibility of the analysis, the article constructs a Resource Index and an Outcome Index, calculates the gap between them, and applies coefficients of variation and Spearman’s rank correlation. The results show that interregional disparities are pronounced and multidimensional. The coefficient of variation is higher for the Outcome Index than for the Resource Index, indicating that innovation-related economic outcomes are distributed more unevenly across regions than the resource base. Spearman’s rank correlation coefficient indicates a positive but incomplete association between resources and outcomes, meaning that stronger resource positions do not automatically translate into proportionally stronger economic results. The regional typology identifies several resource–outcome configurations, including regions with high resources and strong outcomes, regions with high resources but not fully realized outcomes, regions with moderate resources and strong outcomes, and regions with both low resources and weak recorded outcomes. The findings suggest that innovation policy in Kazakhstan should be territorially differentiated and should focus not only on expanding innovation resources, but also on strengthening the mechanisms that convert resources into economically meaningful outcomes.

Economies doi: 10.3390/economies14050191

Authors: Yazeed Abdulaziz Bin Ateeq

Despite the growing importance of the Saudi capital market, sectoral-level volatility connectedness within Tadawul remains largely unexplored. This study contributes to the literature by applying the Diebold–Yılmaz framework to examine volatility connectedness across 16 Tadawul sectors over the period January 2017 to December 2024. Total, directional, and net pairwise volatility spillovers are quantified from daily closing prices using a VAR(4) model combined with generalized forecast error variance decomposition. The static analysis reveals a high overall connectedness of 80.49%, indicating that cross-sectoral spillovers account for the majority of volatility fluctuations. Materials, Transportation, and Real Estate Management and Development are identified as the dominant net transmitters of volatility, while Utilities and Telecommunication Services are persistent net receivers. The dynamic analysis shows that sectoral connectedness is highly time-varying, peaking at 93.70% during the COVID-19 period, with additional episodes of elevated spillovers during 2022–2023. The network analysis reveals that the strongest pairwise linkages exist among Materials, Transportation, Real Estate Management and Development, and Banks, forming the core of the spillover network. While block-bootstrap results reinforce the identification of dominant net transmitters and receivers, they reveal substantial uncertainty in the rank-order of intermediate sectors, necessitating a more nuanced interpretation. The results are robust to alternative rolling window sizes and forecast horizons. These findings have important implications for portfolio diversification, sectoral risk monitoring, and macroprudential policy in the Saudi capital market.

Economies doi: 10.3390/economies14050190

Authors: Mustafa Terzioğlu Burçin Tutcu Günay Deniz Dursun Neylan Kaya Aslıhan Ersoy Bozcuk Oğuzhan Çarıkçı Güler Ferhan Ünal Uyar

Financial stability and banking sector performance have become critical concerns for policymakers and regulators in the aftermath of global financial crises. This study aims to evaluate the financial soundness of banking sectors across OECD countries by employing an integrated multi-criteria evaluation framework based on Financial Soundness Indicators (FSIs) for the year 2024. The analysis focuses on key dimensions such as profitability, asset quality, capital adequacy, and liquidity conditions. To enhance methodological robustness, objective criterion weights are derived using the Modified Standard Deviation (MSD) and Modified Preference Selection Index (MPSI) methods and then combined within a unified weighting scheme. Country rankings are obtained through the MABAC method, and the stability of the results is further examined using sensitivity analysis. This integrated approach provides a more balanced evaluation by reducing the potential bias associated with relying on a single weighting method. The findings indicate that the ratio of non-performing loans to total gross loans plays a dominant role in differentiating banking sector soundness among OECD economies, highlighting the importance of credit risk and balance-sheet resilience in comparative macroprudential evaluations. In addition, the results reveal relatively distinct performance patterns between countries characterized by stronger capital structures and lower credit risk exposure and those exhibiting comparatively weaker resilience indicators. Overall, the study contributes to the literature by providing a structured and robust framework for comparative banking sector assessment and offers policy-relevant insights for comparative macroprudential monitoring and the assessment of banking sector resilience across OECD countries.

Economies doi: 10.3390/economies14050189

Authors: Rocío González-Reyes Ángel Maridueña-Larrea Patricio Álvarez-Muñoz Geoconda Álava-Bravo

Okun’s Law has been predominantly estimated at the aggregate level and for advanced economies, leaving its heterogeneity insufficiently explored in developing countries. This paper examines such heterogeneity for Ecuador, articulating for the first time in a developing and dollarised economy the multilevel estimation of the coefficient, the assessment of its temporal stability and the test for cyclical asymmetry within a single analytical framework. The relationship between economic activity and unemployment is estimated at the national level and for 19 disaggregations by area, sex, age, ethnicity and educational attainment, using monthly series from 2021 to 2025. The results suggest that the aggregate coefficient conceals a profound heterogeneity: Okun’s Law operates with intensity in the urban, female, youth, Afro-Ecuadorian and university-educated segments, yet is non-existent in the rural, male, older-age, indigenous and lower-education strata. This configuration is temporally robust and predominantly symmetrical between phases of the cycle, with specific exceptions in the Montubio and postgraduate segments. Economic growth reduces unemployment only in certain groups, whilst in the remainder the cyclical adjustment is channelled through margins that conventional statistics do not capture, suggesting that economic growth may be a necessary but not sufficient condition for improving labour market outcomes as a whole.

Economies doi: 10.3390/economies14050188

Authors: Wisdom Okere Cosmas Ambe Sanele Phumlani Vilakazi

The finance–environment nexus in Sub-Saharan Africa remains complex, particularly in nations where institutional quality and fiscal policies are in an early stage. To address this, the study evaluates the impact of financial development on environmental sustainability in Sub-Saharan Africa, emphasising the moderating roles of environmental taxes and regulatory quality. Using a balanced panel methodology across 11 SSA nations from 2006 to 2023, the study employs a multi-estimation model (fixed effects (FE), Fully Modified Ordinary Least Squares (FMOLS) and Autoregressive Distributed Lag (ARDL)) to capture both short- and long-run relationships. From the analysis, the FE and FMOLS estimates indicate that financial development significantly increases ecological footprints, while foreign direct investment and government expenditure are associated with lower environmental footprints. However, the ARDL estimates reveal that environmental taxes and regulatory quality significantly reduce the ecological footprint, motivating a policy shift. Most importantly, the moderation estimation reveals that environmental taxes condition the finance–environment nexus in SSA. This depicts that while financial development worsens environmental outcomes, its adverse effects are nullified and reversed under a stronger environmental tax framework. These findings are relevant to the Environmental Kuznets Curve theory and draw insights from the institutional and financial intermediation theory. The study provides evidence that financial development, when integrated with effective environmental taxation and institutional quality, promotes environmental sustainability in SSA. Policymakers are therefore urged to strengthen environmental tax frameworks, integrate green financial intermediation and intensify regulatory institutions to achieve a sustainable finance–environment model and support SDG 13 in SSA.

Economies doi: 10.3390/economies14050187

Authors: Ngu Wah Win Supanika Leurcharusmee Worrawat Saijai

This paper examines how remittances-to-GDP are conditionally associated with GDP growth upswings and downturns in four lower-middle-income countries (LMICs) in mainland Southeast Asia—Cambodia, Laos, Myanmar, and Vietnam (CLMV)—over 2000–2021, conditional on other external inflows including foreign direct investment (FDI), official development assistance (ODA), and trade openness. Employing a nonlinear Autoregressive Distributed Lag (N-ARDL) model with a Dynamic Fixed Effects (DFE) estimator, this study estimates short- and long-run regime-differentiated associations between GDP growth regimes and remittances to GDP, controlling for foreign direct investment (FDI), official development assistance (ODA), and trade openness. GDP growth is decomposed into above- and below-median regimes, allowing the model to examine whether remittance dynamics differ across growth upswings and downturns. Panel estimates are complemented with dynamic multipliers that trace conditional adjustment paths over different horizons. The results reveal a high-growth-driven regime pattern rather than formal statistical evidence of unequal high- and low-growth coefficients. In the long run, above-median growth significantly reduces remittances to GDP (θ^1=−0.130, very strong evidence), consistent with the household insurance motive; below-median growth has no significant long-run association (θ^2=−0.127, no evidence). In the short run, above-median growth is positively associated with remittances (β˜^1+=0.033, very strong evidence), while below-median growth again shows no significant short-run response (β˜^1−=0.051, no evidence). Formal Wald tests do not reject equality between the high- and low-growth coefficients in either horizon; therefore, the findings should be interpreted as a regime-differentiated significance pattern within a nonlinear specification, not as formal proof of coefficient asymmetry. Taken together, these responses are consistent with a one-sided counter-cyclical interpretation of remittances: remittances to GDP decline when domestic growth is above the median, while no significant adjustment is observed during below-median growth episodes. The pattern documented here is therefore driven by the high-growth regime and should not be read as evidence of an active counter-cyclical surge during downturns. Trade openness and ODA exhibit significant positive short-run co-movement with remittances, whereas FDI shows a strong positive long-run association with remittances to GDP. The novelty of this study lies in providing new panel evidence on regime-differentiated remittance–growth associations for CLMV within a nonlinear N-ARDL and dynamic multiplier framework, while transparently reporting that formal Wald tests do not reject equality between high- and low-growth coefficients. Policy implications center on facilitating reliable remittance channels—reducing transfer costs and expanding financial inclusion—without assuming that remittance inflows automatically rise during downturns.

Economies doi: 10.3390/economies14050185

Authors: Katarzyna Czech Michał Wielechowski

Geopolitical tensions remain an important source of uncertainty for global oil markets. This study examines whether recent geopolitical shocks related to escalating tensions in the Middle East in 2025–2026 were associated with changes in oil price volatility regimes. The analysis is based on daily WTI crude oil prices covering the period from 1 January 2024 to 10 April 2026. A two-regime Markov-switching GARCH model is used to identify low- and high-volatility states. The regime classification is further supported by return-variance tests, episode-level descriptive statistics, and a sensitivity analysis of alternative probability thresholds. The results show that the oil market remained in a low-volatility regime for most of the sample, but three distinct high-volatility episodes were identified, i.e., in early April 2025, June 2025, and late February to April 2026. These episodes differed in duration, direction, and intensity. The 2026 episode was the longest and most persistent high-volatility period, with the highest conditional volatility, the highest average probability of the high-volatility regime, and the widest daily price ranges. The sensitivity analysis confirms that the identification of the three main episodes is robust to stricter probability thresholds. The findings suggest that recent geopolitical shocks coincided with distinct volatility regime episodes in the oil prices, with direct military escalation in the Middle East being associated with the strongest and most persistent market turbulence.

Economies doi: 10.3390/economies14050186

Authors: Khalid El Houcine Lhoussaine Alla

The relationship between tourism development and economic growth has been extensively studied through the lens of the tourism-led growth hypothesis. Despite the abundance of literature on the hypothesis, empirical results vary depending on the country or methodological approach. This study proposes a meta-analytic review to examine the structural determinants shaping the tourism-led economic growth hypothesis. The methodological approach is based on the PRISMA 2020 and MOOSE guidelines, which ensure the rigorous selection and analysis of the 45 studies from Scopus and Google Scholar included in this review. The results highlight a statistically significant relationship between tourism development and economic growth. However, the magnitude of this effect varies considerably depending on structural conditions and methodological characteristics. Environmental factors, regional contexts, and sectoral and institutional structures were identified as the main moderators of this relationship. By synthesizing fragmented empirical evidence, this study provides a nuanced understanding of the structural determinants shaping the tourism-led economic growth hypothesis. The findings contribute to the theoretical debate by identifying contextual factors that amplify or hinder the effectiveness of economic development strategies targeting the tourism sector. From a policy perspective, the tourism sector has shown that it can support economic growth when it is backed by favorable institutional conditions and the right infrastructure.

Economies doi: 10.3390/economies14050184

Authors: Chunxia Tian Yirong Bai Roengchai Tansuchat Songsak Sriboonchitta

Predicting financial stock returns remains challenging due to their inherent nonlinearity, non-stationarity, and sensitivity to market microstructure noise. Existing approaches typically rely on either econometric filtering techniques or deep learning models in isolation, limiting their ability to jointly capture latent dynamics and complex temporal dependencies. This study proposes a hybrid Extended Kalman Filter–Long Short-Term Memory (EKF–LSTM) framework that integrates nonlinear state-space filtering with deep sequential learning. The EKF component performs nonlinear state estimation and denoises to extract latent signals from noisy observations, while the LSTM network models nonlinear temporal dependencies in the filtered series. The proposed framework is evaluated using data from multiple international markets, including China, the United States, and Europe, providing cross-market evidence of model robustness. Empirical results show that the EKF–LSTM model consistently outperforms benchmark models (ARIMA, standalone EKF, LSTM, and GRU) across standard statistical metrics, including RMSE, MAE, and mean directional accuracy (MDA). In addition, the model delivers economically meaningful improvements under a long-only trading strategy, achieving higher risk-adjusted returns and lower maximum drawdowns relative to benchmark strategies. Diebold–Mariano tests further confirm that these performance gains are statistically significant. Overall, the findings demonstrate that integrating nonlinear state-space filtering with deep learning provides a robust and effective framework for financial time-series forecasting. However, the results should be interpreted with caution due to the limited sample size and the simplifying assumptions underlying the trading strategy.

Economies doi: 10.3390/economies14050183

Authors: Zokir Mamadiyarov Sukhrob Kholmatov Yuldoshboy Sobirov Gulchekhra Narzullayeva Arslonbek Matyoqubov Artikov Beruniy Fayzulla Mirzaev

This study investigates the determinants of economic growth in the Next-11 economies over the period 1996–2024, with particular emphasis on the roles of structural, institutional, and human capital factors. Using a comprehensive panel dataset for eleven emerging economies, the analysis employs three robust estimation techniques—Driscoll–Kraay Standard Errors (DKSEs), Feasible Generalized Least Squares (FGLSs), and Panel-Corrected Standard Errors (PCSEs)- to address common econometric issues such as heteroskedasticity, serial correlation, and cross-sectional dependence. The empirical results reveal that industrial output, energy consumption, human capital, institutional quality, and foreign direct investment significantly contribute to economic growth. Among these factors, industrial output and energy consumption exhibit particularly strong and consistent positive effects across all estimation methods, highlighting the importance of structural transformation and energy availability in supporting economic expansion. In contrast, trade openness shows a negative and statistically significant relationship with economic growth in most model specifications, suggesting that structural constraints, import dependence, and limited domestic productive capacity may restrict the growth benefits of external integration in these economies. The study also explores the conditional effects of foreign direct investment through interaction terms with human capital and institutional quality. The findings indicate that the growth-enhancing impact of foreign investment depends significantly on domestic absorptive capacity, particularly the availability of skilled labor and effective governance structures. These results emphasize the importance of complementary policies aimed at strengthening education systems, improving institutional quality, and enhancing regulatory effectiveness. From a policy perspective, the findings suggest that the Next-11 economies should prioritize industrial development, energy infrastructure expansion, human capital investment, and institutional reforms to maximize the benefits of globalization and foreign investment. Overall, the study contributes to the literature by providing robust empirical evidence on the interconnected roles of structural, institutional, and human capital factors in shaping economic growth in emerging economies.

Economies doi: 10.3390/economies14050182

Authors: Monem Abidi Adel Benhamed

This paper develops a dynamic signaling framework to analyze how educational investment evolves under imperfect information and how the informational value of credentials changes over time. It addresses a central question: under what conditions do signaling equilibria become fragile, and how does this fragility generate educational overinvestment and credential inflation in equilibrium? The model features heterogeneous productivity groups and endogenous educational choices, in which education plays both a signaling and a productive role. Informational frictions and wage-setting mechanisms jointly determine equilibrium configurations, allowing for separation, pooling, and mixed equilibria. The analysis shows that separating equilibria are inherently fragile: when signaling costs decline or when the share of lower-productivity workers becomes sufficiently small, incentives for imitation intensify, progressively eroding informational differentiation. This fragility gives rise to a cascade mechanism of overinvestment, whereby individuals increase educational attainment beyond efficient levels to preserve relative positioning. As a result, signaling distortions propagate across educational levels, generating persistent credential inflation and weakening the informational content of degrees. The framework also identifies conditions under which mixed equilibria may dominate separating equilibria in terms of aggregate welfare, particularly when the proportion of low-productivity workers is limited. By incorporating a productive dimension of education, the model distinguishes between pure signaling rents and genuine productivity gains, providing a unified interpretation of overeducation, declining returns to credentials, and persistent wage dispersion. Finally, the analysis characterizes an optimal taxation scheme that eliminates inefficient signaling rents while preserving incentives for productivity-enhancing investment. Taken together, the results highlight how equilibrium fragility, informational distortions, and strategic educational measures provide a unified explanation for diploma inflation, equilibrium segmentation, and persistent deviations from socially optimal investment levels.

Economies doi: 10.3390/economies14050181

Authors: Dang Thi-Huyen-Anh

This paper examines how the composition of digital trade liberalization shapes trade adjustment patterns in a low-tariff environment. While digital technologies are often treated as a unified category, different components may generate distinct economic effects and policy implications. Using Vietnam as a case study, the analysis distinguishes between information technologies (ITs), which are embedded in production processes, and communication technologies (CTs), which primarily reduce coordination costs. A partial equilibrium simulation is conducted using the WITS-SMART model based on 2023 trade and tariff data. The results show that tariff elimination in IT products leads to a substantially stronger import response and a larger reduction in tariff revenue compared to CT. However, the overall magnitude of these effects remains modest, reflecting Vietnam’s already low tariff structure. The findings highlight the importance of accounting for heterogeneity within digital technologies when assessing trade liberalization in emerging economies.

Economies doi: 10.3390/economies14050180

Authors: Constantin Colonescu

This article studies why the same Bank of Canada tightening is reflected differently in provincial CPI inflation. It combines monthly provincial data from January 1991 to December 2024 with interacted local projections and public-data measures of common national monetary movements. The design estimates reduced-form provincial loadings in a common monetary environment, rather than structural responses to a single externally identified surprise. The main result is a housing-sensitive gap between headline inflation and inflation excluding shelter. Provinces with larger shelter weights and higher household debt–service exposure show a stronger headline response than non-shelter response after a common tightening. The evidence does not reduce to rent or to basket arithmetic alone: debt–service exposure is the more stable standalone component, while shelter weights tie the differential to measured CPI. Outside shelter, no single provincial characteristic dominates. Internal trade integration is associated with smaller baseline deviations from the national non-shelter response, but energy-related provincial composition is at least as informative in the competing-factor specifications. The paper therefore identifies shelter and household debt as the clearest sources of provincial incidence under one policy rate, while treating non-housing deviations from the national response as a broader provincial-structure result.

Economies doi: 10.3390/economies14050179

Authors: Sardorbek Makhmudov Nodir Jumaev Ulugbek Urinboev Zokir Mamadiyarov Jurabek Kuralbaev Feruz Kurbanov Sitora Xasanova

This study examines the impact of energy risk on environmental quality in BRICS economies (Brazil, Russia, India, China, and South Africa) from 2000 to 2024, including economic growth, renewable energy, institutional quality, urbanization and energy usage. Specifically, this study uses Fully Modified Ordinary Least Squares (FMOLS) under the Environmental Kuznets Curve (EKC) hypothesis to estimate long-run relationships in countries, assessing robustness through Driscoll–Kraay Standard Errors to address heteroskedasticity, serial correlation, and cross-sectional dependence. The empirical findings provide strong support for the EKC hypothesis, as evidenced by the positive and significant coefficient of economic growth and the negative and significant coefficient of its squared term. Energy consumption and urbanization are found to significantly increase environmental degradation, indicating their substantial contribution to emissions. In contrast, renewable energy consumption significantly reduces emissions, highlighting its role in improving environmental sustainability. Importantly, energy risk does not exhibit a statistically significant impact on environmental quality, suggesting that energy security vulnerabilities have not directly translated into measurable environmental effects in the long run across BRICS countries. Institutional quality shows a positive and significant relationship with emissions, implying that governance improvements alone have not yet effectively supported environmental sustainability and decarbonization efforts. Overall, the findings underscore the need for integrated policy frameworks that promote renewable energy adoption, manage urban expansion, and enhance the effectiveness of institutional mechanisms to achieve sustainable environmental outcomes in BRICS economies.

Economies doi: 10.3390/economies14050177

Authors: Ateeq Ullah Supanika Leurcharusmee Woraphon Yamaka

This study examines the relationship between governance quality and outbound tourism expenditure. Annual panel data for 54 countries over the period 1996–2023 are analyzed using symmetric and asymmetric panel ARDL models. The results highlight the existence of a long-run relationship between governance quality and outbound tourism expenditure. The symmetric ARDL results indicate that governance quality exhibits a significant negative long-run effect on outbound tourism expenditure, suggesting that improvements in governance quality reduce residents’ spending on international travel. The effect remains significant only in low-governance countries when the sample is separated into low- and high-governance countries. The asymmetric ARDL results further reveal that positive governance shocks significantly reduce outbound tourism expenditure, while negative shocks increase it only in high-governance countries. Overall, the findings highlight the important role of institutional quality in shaping tourism consumption behavior and provide policy insights for managing tourism-related outbound expenditures.

Economies doi: 10.3390/economies14050178

Authors: Babatunde Lawrence Fabian Moodley

This study examines the network dynamics and shock transmission in the relationship between BRICS property market returns and geopolitical risk indicators, applying a time-varying parameter vector autoregression (TVP-VAR) method. The goal of this study is to investigate the dynamic connectedness and shock transmission between geopolitical risk and property returns in BRICS countries, with further insight into how geopolitical events lead to risk transmission. Using monthly data from February 2011 through June 2025 and isolating two tension periods after COVID-19, 2022 and 2024, we investigate geopolitical events and their shock transmissions. The findings illustrates the complexity of shifting geopolitical tensions and their effects on cross-market spillovers. That being, there exists moderate but economically significant systemic interconnectedness, with approximately half of the forecast error variance explained by cross-market shocks. This study further provides robust empirical evidence on the direct effects of geopolitical risk on BRICS property markets and their dynamic interconnectedness. Geopolitical risk especially originating from Russia and China, is found to be the key net transmitter of shocks to the region, whereas Brazil, India, and South Africa are the main net receivers. The results add to the evidence of regime-dependent spillovers, magnified by major geopolitical episodes such as the Russia–Ukraine war and the 2024 expansion of BRICS. Property markets are more vulnerable to geopolitical instability, showing their susceptibility to external risk spread. This study has implications for the sustainability and financial stability literature by emphasising the systemic nature of geopolitical risk in property markets, and it provides practical guidance for portfolio diversification, risk management and policy coordination in the BRICS bloc.

Economies doi: 10.3390/economies14050176

Authors: Jingshuang Gu Jinghong Gu

Population aging weakens the research base for growth in Organisation for Economic Co-operation and Development (OECD) economies. This paper develops a balanced-growth benchmark with semi-endogenous knowledge production, human-capital deepening, and artificial intelligence (AI) research capital to derive in closed form the minimum AI-investment share consistent with non-negative per capita growth. Calibrated to an illustrative 15-country OECD sample spanning contrasting demographic regimes and gross expenditure on research and development (GERD)-intensity profiles, using United Nations World Population Prospects 2024 and OECD Main Science and Technology Indicators data, the formula yields midpoint thresholds of 0.236–0.275% of gross domestic product (GDP) when 10% of GERD is assumed to be AI-designated. The midpoint normalization is anchored to the best currently available OECD/European Commission (EC) measurement evidence, which places the AI-designated share of aggregate research and development (R&D) at 8.8% for the EU27, 9.9% for the United States, and 7.9% for Japan—all within the 5–15% window used here. Although this range is narrow in GDP-point terms, it implies research requirements from about 5–7% of GERD in South Korea and the United States to about 18–20% in Italy, Poland, and Spain. The common normalization shifts levels but not the cross-country ranking. These results favor demographically adjusted, country-specific AI-investment benchmarks over an OECD-wide target and imply that migration and research-base expansion can partly substitute for higher AI spending in high-pressure economies.

Economies doi: 10.3390/economies14050175

Authors: Heppi Syofya Haryadi Haryadi Junaidi Junaidi Siti Hodijah

This study seeks to explain how structural factors, farmers’ capacity, technology adoption, and market orientation jointly shape productivity in smallholder Arabica coffee farming. Primary data were collected from 152 Arabica coffee farmers in Kerinci Regency, Jambi Province, Indonesia, between June and August 2025 and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results show that infrastructure and government policy have positive and significant effects on technology adoption. However, infrastructure does not directly affect productivity, whereas government policy shows a negative, significant effect on productivity, suggesting a possible misalignment between policy support and farmers’ practical production needs. In contrast, digital literacy and market orientation are found to be the main determinants that significantly enhance productivity. Technology adoption does not have a significant effect, either directly or as a mediating variable, suggesting a gap between adoption and utilization at the farm level. The moderation analysis reveals that market orientation strengthens the relationship between digital literacy and productivity. Overall, these findings emphasize that productivity improvement is not solely determined by technology, but is more strongly influenced by farmers’ capacity and market orientation.

Economies doi: 10.3390/economies14050174

Authors: Dintuku Maggie Kgomo Thobeka Ncanywa

Economic development is a phenomenon that involves the financial stability and standard of living of a nation’s population. To achieve economic prosperity, sound financial development, as a fundamental basis for economic development, is important. The effect of financial markets on economic development in South Africa is considered for the period 1998 to 2021. The economic development index (EDI) was used as the response variable as an indicator for economic development; financial markets were used as the explanatory variables, namely the foreign exchange (forex) markets, stock markets and money markets. The autoregressive distributed-lag econometric approach was applied. The stock market and money market were found to have a positive effect on the EDI, although only the stock market was statistically significant in terms of the probability value. The causality test showed that there exist unidirectional relationships between the stock market and the EDI; the EDI and the money market; and the forex market and the EDI. Sound financial markets and financial institutions make up a stable financial system, which makes the economy resilient to adverse shocks. Hence, unstable financial systems will have an adverse effect on the functioning of the economy by increasing the likelihood of a financial crisis.

Economies doi: 10.3390/economies14050173

Authors: Mohammad Alawin

This study explores the degree of capital mobility in selected APEC economies over the period 2000–2023, using a consumption-based approach. The motivation stems from the well-known limitations of the traditional investment–saving framework associated with the Feldstein–Horioka puzzle, which may not fully capture how capital actually moves across borders. To address this issue, the paper adopts an alternative perspective by examining how domestic consumption responds to external consumption patterns relative to domestic income. The analysis focuses on six economies, including both developed countries (the United States, Canada, and Australia) and developing countries (Chile, Thailand, and Indonesia), allowing for a meaningful comparison across different levels of economic development. The findings indicate that capital is indeed mobile, but not perfectly so. More notably, the results suggest that capital mobility tends to be stronger in developing economies than in developed ones. This outcome challenges conventional expectations based on standard measures of financial openness and highlights the gap between formal financial liberalization and actual capital movement in practice. Overall, the study provides a deeper understanding of capital mobility and offers useful insights for policymakers seeking to enhance financial integration and improve the effectiveness of capital flow management, particularly in developing economies.

Economies doi: 10.3390/economies14050172

Authors: Teresa Torres-Coronas Jorge de Andrés-Sánchez

In this paper, the factors linked to happiness are analyzed on the basis of the World Happiness Report (WHR) model, introducing a methodological approach that differs from traditional econometric techniques. More specifically, this study examines how the core variables of the WHR model interact in relation to happiness and whether some of them also emerge as necessary conditions within the framework of necessary condition analysis (NCA) for attaining higher happiness levels. Using Gallup World Poll data for the 2022–2024 period, the Cantril Ladder is employed as a measure of subjective well-being, and gross domestic product (GDP) per capita, social support, healthy life expectancy, freedom, generosity, and perceived corruption are considered explanatory variables. This study makes two contributions. First, it applies a decision tree regression model to identify interactions among the correlates of happiness while also facilitating the classification of countries into homogeneous groups according to their well-being configurations. This approach improves interpretability relative to linear models because it does not require prior specification of those interactions. Second, this paper incorporates necessary condition analysis to distinguish between factors that are merely influential and those that emerge as necessary conditions for attaining certain levels of happiness. These assessments make it possible to identify minimum thresholds in key variables, introducing a necessary-condition logic. The results show that social support and GDP per capita emerge as the main structuring variables in the tree and are strongly associated with differences in happiness, whereas freedom emerges as a prominent condition in the NCA results. The findings also show that some factors with low correlation may still play a relevant role in specific contexts because of nonlinear effects and interactions. Overall, the results of this study offer an analytical reinterpretation of the WHR model by combining structural segmentation and threshold identification, advancing the understanding of happiness as a multidimensional, nonlinear phenomenon associated with specific configurations of factors.

Economies doi: 10.3390/economies14050171

Authors: Prashanth Kumar AC Mukund Sharma Santhosh Venugopal

This study investigates the impact of fiscal contractions on investment dynamics, with a particular focus on the risk of “investment collapses.” Using an unbalanced panel of 107 countries over the period 1960–2023, we construct an investment-collapse indicator based on extreme declines in investment share and identify fiscal contraction shocks based on movements in government spending relative to its historical floor. This study uses a distributed lag framework with Driscoll–Kraay robust standard errors to account for spatial and temporal dependencies while controlling for human capital, institutional quality, and output growth. We find evidence of intertemporal trade-offs, whereby fiscal contractions are associated with an increased likelihood of sharp declines in investment in the impact year. This collapse is followed by a reversal in the subsequent year, suggesting a stabilizing effect that prevents the persistence of extreme downside risk. The results are robust to conditional fixed-effects-based logit specifications and when subjected to stricter shock thresholds.

Economies doi: 10.3390/economies14050170

Authors: Clement Olalekan Olaniyi

This study examines how institutional quality (INST) affects the contribution of natural resource endowments (NREs) to citizens’ happiness and life satisfaction. It also identifies the INST threshold above which NREs enhance citizens’ life satisfaction and happiness. Consistent with challenges of low happiness levels, weak institutions, and the pervasive resource curse in Africa’s resource-rich economies, we analyse a dataset of these economies from 2012 to 2022. This study employs a robust standard-error Driscoll–Kraay nonparametric covariance matrix, dynamic common correlated effects, fully modified least squares, the method-of-moments quantile regression, and a dynamic panel threshold estimator. The findings suggest that natural resource endowment is a curse that lowers life satisfaction. Meanwhile, threshold analysis indicates that most resource-rich African countries fall short of the institutional development required to transform this curse into a blessing by encouraging the efficient allocation of resource earnings to initiatives that increase people’s happiness. Most of Africa’s resource-rich economies operate below this threshold. This study concludes that in Africa’s resource-rich countries, institutions are vital to incentivise the effective distribution of the proceeds from these resources to initiatives that enhance citizens’ happiness.

Economies doi: 10.3390/economies14050169

Authors: Bhagaporn Wattanadumrong Chukiat Chaiboonsri Wittawat Kadthan

This study aims to estimate the effect of disability on household income in Thailand using different econometric approaches and to examine heterogeneity across the income distribution. We analyze data from Thailand’s 2021 Socioeconomic Survey covering 46,775 households, of which 4255 (9.1%) report having at least one disabled member. Employing three complementary methods—ordinary least squares regression, propensity score matching, and quantile regression—we find that households with disabled members experience significant income penalties. The OLS estimate with full controls shows a 10.0% income penalty, while propensity score matching yields 17.4%, suggesting that standard regression underestimates the true effect. Quantile regression reveals striking heterogeneity: the disability effect ranges from 4.8% at the 10th percentile to 30.5% at the 90th percentile. This pattern suggests that among Thailand’s poorest households, both disabled and non-disabled families face universal constraints; leaving minimal scope for disability is strongly associated with reduced household income, while at higher income levels disability creates barriers to advancement. Decomposition analysis indicates disability affects income through both reduced hourly wages (8.2% lower) and fewer work hours (12.4% reduction). These findings reveal that Thailand’s disability allowance of 800 baht per month—representing only 29% of the poverty line—is grossly inadequate, covering merely 17% of the observed income gap. The results highlight urgent needs for allowance increases with inflation indexation, differentiated support across the income distribution, improved employment quota enforcement, and streamlined registration to address the 46% unregistered rate. Policymakers should prioritize raising the monthly allowance to a level commensurate with the national poverty line, implementing tiered benefit structures based on disability severity, and strengthening employment quota enforcement mechanisms to reduce disability-related income inequality.

Economies doi: 10.3390/economies14050168

Authors: Predashni Naidoo Jean Damascene Mvunabandi Masibulele Phesa

This study empirically analysed the class ruling at two South African universities. The principles underpinning the Canons of Taxation, Consumption Theory, and the Principle of Neutrality were reviewed as analytical benchmarks. The literature review synthesised prior studies that examined the ruling or explored apportionment practices within universities. A sequential mixed-methods approach was adopted, beginning with a quantitative phase followed by a qualitative phase. Quantitative data were collected from thirty (37) university staff members through an online questionnaire, and descriptive statistical analysis was conducted using SPSS (version 29). The qualitative phase involved online interviews with ten (10) tax and finance professionals engaged in apportionment practices at universities, capturing their experiences, perspectives, and insights. The data were analysed using thematic and transcript analysis with the aid of NVivo (version 20). The findings indicate that respondents believe the South African Revenue Service should revisit and improve the existing ruling. Concerns were raised regarding the lack of continuous training at universities, cost implications, and the complexity of Value-Added Tax apportionment. In the context of a rapidly evolving higher education sector, the VAT Act and the definition of educational services appear to require reform. Based on these findings, the study recommends that SARS consider revising the ruling by removing a prescribed apportionment rate and allowing universities to adopt methods that are practical and aligned with their operational contexts. Consistent with prior research, the study also finds that the input-based method remains complex, and that the definition of Value-Added Tax within the educational sector is overly broad.

Economies doi: 10.3390/economies14050167

Authors: Lucien Rigaux

This article examines how the redistributive design of crisis-time fiscal policy shaped Belgian federal public debt trajectories from 1912 to 2024. Drawing on a reconstructed debt-to-GDP series and historical–institutional analysis, it identifies a secular transformation in the distributive logic of fiscal adjustment. From 1912 to the late 1970s, broadly speaking, debt surges were addressed through explicitly progressive instruments grounded in the ability-to-pay principle, and on the view that capital should be taxed at least as heavily as labour. From the 1980s onward, this paradigm gave way to a competitiveness-oriented model that eroded tax progressivity, detached capital from the global tax base, and shifted the fiscal burden onto consumption and labour—disproportionately affecting middle-income earners. The evidence presented in this article points to three plausible determinants of this transformation: the role of mass warfare in legitimising progressive taxation; the ideological shift from Keynesian interventionism to supply-side orthodoxy; and the twin constraints of internal federalisation and external Europeanisation. Furthermore, the timing and modalities of these adjustments appear to have been significantly shaped by linguistic party fragmentation and the recurrent use of emergency executive powers—a pattern that was increasingly mirrored in the European Union’s own governance. Ultimately, since 2020, crisis management has relied almost exclusively on debt-financed expenditure. While the EU has temporarily acted as a redistributive counterweight to domestic fiscal paralysis, these ad hoc supranational interventions have left Belgium’s underlying debt trajectory unchanged.

Economies doi: 10.3390/economies14050166

Authors: Yoomi Kim Yoosun Kim Bongchul Kim

This study examines the economic role of environmental industries in the major Association of Southeast Asian Nations (ASEAN) economies using the environmental input-output (EIO) framework and multiregional input-output (MRIO) tables provided by the Asian Development Bank (ADB). It evaluates the production-inducement effects, value-added inducement effects, and inter-industry linkage structures of environmental industries in the five ASEAN countries: Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. The results reveal three main findings. First, infrastructure-related environmental sectors, particularly the electricity, gas, and water supply sectors, exhibit strong inter-industry linkages and generate substantial production spillover effects across the ASEAN economies. Second, significant cross-country heterogeneity exists in value-added inducement effects, reflecting differences in industrial maturity, domestic value-chain depth, and institutional capacity. Third, the economic effectiveness of environmental industries depends not only on their scale, but also on their structural integration within national and global production networks. These findings suggest that environmental industries in ASEAN function not only as environmental management tools, but also as strategic drivers of economic growth.

Economies doi: 10.3390/economies14050165

Authors: Mahdi Imani Bashokoh Kinfemichael Nigussie Carol Wangari Maina Gergely Tóth

This study examines the relationship between corporate concentration and labour market conditions in Hungary’s food industry over the period 1993–2022. Using industry-level panel data for the four most highly concentrated subsectors, cereals, food processing, oils and fats, and sugar and confectionery, corporate concentration is measured using the Herfindahl–Hirschman Index (HHI), and a two-way fixed-effects panel regression model is employed to assess its association with wage structures, working-time arrangements, and employment composition. The results reveal a statistically significant negative relationship between corporate concentration and both gross monthly earnings and base hourly wages. A 1000-point increase in the HHI is associated with an approximately 10 percent decline in base wages. Higher concentration is also positively associated with greater reliance on part-time employment and increased overtime intensity, alongside a significant reduction in paid leave provision. Importantly, when variables capturing working-time arrangements and employment structure are incorporated into the earnings model, the direct effect of concentration becomes statistically insignificant. This pattern likely reflects the fact that these variables are directly embedded in the determination of gross monthly earnings, suggesting that the effect of concentration operates indirectly through adjustments in working time and employment composition rather than through a purely independent channel. This finding suggests that the impact of concentration on wages operates partly through structural adjustments in compensation systems and increased labour flexibility. Overall, the evidence indicates that corporate concentration in Hungary’s food manufacturing sector does not necessarily reduce nominal earnings but instead reshapes their composition. The role of base wages weakens, while regular bonuses emerge as the primary mechanism of income adjustment, increasing managerial discretion and income volatility. These findings contribute to the literature on labour market monopsony in transition economies and underscore the importance of integrating labour market considerations into competition policy frameworks.

Economies doi: 10.3390/economies14050164

Authors: Doochun Kim

This study examines the role of political partisanship in shaping state-level renewable energy policy, with a particular focus on the temporal dynamics of Renewable Portfolio Standard (RPS) adoption. It addresses a critical gap in the existing literature by asking whether political ideology affects RPS adoption immediately or only after delayed institutional responses. Using panel data for all 50 U.S. states from 2001 to 2024, this study contributes to the literature by identifying policy lags and structural shifts in renewable energy policy development. Employing fixed-effects panel regression with clustered standard errors, this study finds that contemporaneous Democratic control is statistically insignificant, whereas the two-year lag of Democratic control is positively and significantly associated with a higher probability of RPS adoption. The three-year lag also remains positive, although it is only marginally significant in the preferred specification. These findings support the policy lag hypothesis, suggesting that political influence is mediated by institutional inertia. Electricity prices are positively associated with RPS adoption in some specifications, whereas GDP per capita remains statistically insignificant. In addition, the Hausman test supports the fixed-effects specification, and the Bai–Perron multiple breakpoint test identifies significant structural breaks in 2007 and 2015. Overall, the findings indicate that partisan influence is better understood as a delayed rather than an immediate process. Accordingly, policymakers and stakeholders should account for institutional and regulatory lags when designing long-term energy transition strategies.

Economies doi: 10.3390/economies14050163

Authors: Javier Petri Luis Iglesias Julián Alonso

Estimating long-term prices for base metals is central to the financial viability of mining investments, yet prices remain highly volatile and difficult to forecast. This study systematizes the determinants of base metal prices and evaluates their empirical influence using daily and weekly data from the London Metal Exchange (LME) for aluminium, copper, nickel, and zinc between April 2005 and May 2017. In this context, the study aims to identify and evaluate the key economic, financial, and physical drivers of base metal prices, with particular emphasis on distinguishing between short-run predictive factors and long-run equilibrium determinants. After aligning metal prices with candidate explanatory variables, linear associations are quantified through Pearson correlations and alternative functional forms are explored for price modelling, including linear, log-linear, and selected nonlinear transformations. The methodology is complemented with econometric diagnostics. Explanatory variables are grouped into four categories: (i) supply–demand metrics (inventories, production–consumption balances, sales aggregates, and LME position data), (ii) business cycle and income proxies (global GDP growth, China Caixin PMI, the U.S. S&P 500 index, and China steel rebar futures), (iii) investment variables (cross-metal prices and Brent crude), and (iv) monetary indicators (U.S. and the U.S. 10-year yield). Results show that short-run price movements are mainly driven by business cycle indicators and inventory dynamics, while long-run trends reflect structural supply conditions. Monetary variables generate temporary price impulses, and prices tend to lead speculative positioning rather than the reverse.

Economies doi: 10.3390/economies14050162

Authors: Qing Liu Supanika Leurcharusmee Roengchai Tansuchat Songsak Sriboonchitta

China’s shift from strict fertility control to a pro-natalist regime may have unintentionally intensified gender inequality in labor markets. This study investigates the gendered labor-market effects of fertility policy reforms using nationally representative data from the China Family Panel Studies (CFPS). We adopt a weighted nonlinear difference-in-differences (DID) and difference-in-differences-in-differences (DDD) framework to address selection bias and unobserved heterogeneity in binary labor-market outcomes, combining survey weights with causal reweighting to enhance population-level inference. The results indicate that while aggregate DID effects appear neutral to mildly positive, triple-difference estimates reveal substantial penalties for women aged 20–39. Specifically, fertility-policy reforms reduce promotion probabilities by approximately 6–8 percentage points, employment probabilities by 3–4 percentage points, and the likelihood of earning above the median wage by about 6–7 percentage points. These effects are consistent across alternative weighting schemes and remain robust to placebo tests, event-study specifications, and additional controls for differential trends. This study contributes to the literature by demonstrating how demographic policy interventions can generate unintended distributional consequences through employer expectations and statistical discrimination. The findings highlight a policy trade-off between demographic revitalization and gender equality, suggesting that pro-natalist policies may reinforce labor-market disparities in the absence of complementary institutional reforms. These results underscore the importance of aligning demographic objectives with gender-equality policies, particularly in the context of Sustainable Development Goal 5.

Economies doi: 10.3390/economies14050161

Authors: Omnia Osama ElHusseiny

This paper adopts the Augmented Solow model as the core empirical framework. It aims to examine the influence of institutions as moderators in the relationship between technological efficiency and labor productivity. The existing literature has not sufficiently integrated technological efficiency within the Augmented Solow framework, and they also tend to examine these dimensions in isolation rather than capturing their interactive (moderating) effects on labor productivity. To achieve the objective of this study, countries were classified into High, Upper-Middle and Lower-Middle income countries. The model examines the vast gap between the countries and finds that, according to their income, the gap will widen due to destructive-applicable institutions. This study applies a panel analysis using the data for 175 countries during the period 1990–2019. The results provide recommendations for addressing these challenges to enhance output and promote long-term economic growth. The empirical results show that the quality of the institutional context determines its impact. In particular, the interaction term shows that while efficiency benefits are dampened under worse institutional settings, they are greatly magnified in contexts with above-average institutional quality. As a result, this study emphasizes that policies that only aim to increase productivity or encourage the adoption of new technologies are inadequate without a robust and well-functioning institutional environment.

Economies doi: 10.3390/economies14050160

Authors: Gintarė Leckė Renata Legenzova

This study examines the differences in dynamic financial resilience between urban and rural small and medium entities (SMEs) and investigates how these differences are affected by SME resourcefulness. SMEs in urban areas generally benefit from higher productivity, stronger innovation capacity, and better access to financial resources, resulting in superior performance during both stable periods and crises. However, empirical evidence on SMEs’ financial resilience, particularly across spatial contexts, remains limited. Addressing this gap, the study adopts a capabilities-based perspective, assessing SMEs’ financial resilience across proactive, responsive–adaptive, and reactive phases. SME resourcefulness, as a key determinant of financial resilience, is captured through behavioural, financial, entrepreneurial, and social dimensions. The empirical analysis is based on a dataset of 251 Lithuanian SMEs. It employs multi-group confirmatory factor analysis (MGCFA) and multi-group structural equation modelling (MGSEM) to compare urban and rural SMEs. The results show that, compared to rural SMEs, urban SMEs demonstrate higher overall financial resilience (latent mean difference = −0.222), with significant differences particularly evident in the responsive–adaptive (−0.287) and reactive phases (−0.173). Access to finance (t = −2.594, p = 0.010) and entrepreneurial knowledge (t = −4.565, p = 0.000) emerge as the main determinants explaining the financial resilience gap between urban and rural SMEs, while mentoring remains the least utilised social resource (mean = 2.90 out of 5). To bridge the gap and enhance rural SMEs’ financial resilience, it is essential to implement policies that expand access to finance, strengthen adaptive financial capacities, and promote mentoring and financial education.

Economies doi: 10.3390/economies14050159

Authors: Patrick Mugenzi Annie Uwimana

This paper examines how monetary policy actions, bank liquidity positions, and institutional heterogeneity shape interbank pricing in Rwanda. Using a bank–month panel dataset constructed from transaction-level records on the Rwanda Integrated Payment Processing System (RIPPS) for monthly data from 2018 to 2022, we estimate a dynamic fixed effects model of the interbank spread, defined as the difference between a bank’s volume-weighted borrowing rate and the Central Bank Rate (CBR). The findings show that policy rate changes are transmitted to the interbank market but with incomplete and gradual adjustment. Liquidity buffers lower funding costs in normal times, yet their stabilizing role weakens during system-wide stress, particularly evident during the COVID-19 shock, which generated a broad-based and persistent widening of spreads. Despite holding the bulk of system liquidity, domestically systemic banks do not receive preferential pricing once liquidity positions are controlled for. Robustness checks using a Basel-aligned liquidity risk index confirm that liquidity risk is consistently priced over time. These results suggest that strengthening liquidity forecasting, enhancing fine-tuning operations, improving coordination with fiscal cash-flow cycles, and adjusting corridor design to the policy stance would reinforce interbank market stability and improve the effectiveness of Rwanda’s price-based monetary policy framework.

Economies doi: 10.3390/economies14050158

Authors: Phuc Tran Nguyen

This study examines the role of foreign direct investment (FDI) in provincial income growth and convergence in Vietnam within a dynamic panel framework. Using a balanced dataset of 59 provinces over the period 2002–2022, the analysis employs the two-step System Generalized Method of Moments (System GMM) estimator to account for income persistence, endogeneity, and unobserved heterogeneity. The empirical model incorporates interaction terms to explore whether the growth effects of FDI vary with provincial development conditions and labor-market characteristics. The results reveal a high degree of persistence in provincial income dynamics, indicating that regional disparities evolve gradually over time. In a homogeneous specification, FDI does not exhibit a statistically significant average impact on income growth. However, once regional heterogeneity is explicitly incorporated, foreign investment becomes significantly associated with income dynamics. The negative interaction between FDI and initial income suggests that the marginal growth effect of FDI is stronger in poorer provinces, implying that foreign investment is associated with faster convergence through reduced income persistence. At the same time, the interaction between FDI and educated labor supply highlights the importance of local absorptive capacity and labor-market conditions in shaping the spatial realization of FDI benefits. Overall, the findings suggest that FDI is associated with differences in the dynamics of income adjustment across provinces, with potential implications for the speed of convergence. Its developmental impact appears to depend less on the scale of inflows than on the structural conditions that allow foreign investment to generate locally embedded productivity gains.

Economies doi: 10.3390/economies14050157

Authors: Ai Kar Pao Charuk Singhapreecha Nisit Panthamit

This paper examines the interaction between fiscal and monetary policies in Myanmar under ongoing political and economic uncertainty. We estimate a small open-economy New Keynesian DSGE model using Bayesian methods, combining the Kalman filter with Markov Chain Monte Carlo sampling on quarterly data from 2013Q1 to 2022Q1. The results show a persistent regime of monetary and fiscal policy conflict. While the central bank follows an active anti-inflationary interest rate rule that satisfies the Taylor principle, fiscal policy shows weak responsiveness to public debt, providing limited fiscal backing for monetary stabilization. As a result, monetary tightening aimed at controlling inflation exacerbates fiscal stress through the debt-service channel, undermining the overall effectiveness of macroeconomic stabilization. Political instability emerges as a key structural driver of macroeconomic fragility. Political shocks are highly persistent and are transmitted primarily through increases in the country risk premium, accounting for more than 50% of real exchange rate volatility and generating exchange rate depreciation, higher inflation, and output contraction. Overall, the findings indicate that monetary tightening alone is insufficient to restore macroeconomic stability in fragile and conflict-affected economies. Credible fiscal adjustment and improvements in political stability are necessary to contain external vulnerabilities and restore the effectiveness of monetary policy.

Economies doi: 10.3390/economies14050156

Authors: Augusto Aliaga-Miranda Luis Ricardo Flores-Vilcapoma Paulo César Callupe-Cueva Julio César Mariños-Alfaro Luis Antonio Visurraga-Camargo Wilmar Salvador Chavarry-Becerra

Coffee-price volatility is a recurrent external shock for Peru’s small open economy, with potentially uneven consequences across sectors. This study evaluates whether global coffee prices and domestic macro-agricultural indicators share stable long-run equilibria and quantifies the transmission of coffee-price shocks to the terms of trade, nominal exchange rate, consumer prices, agricultural GDP, and total GDP. Using a multivariate vector error-correction model identified via Johansen cointegration, and controlling for major global disruptions and ENSO-related seasonality, we trace dynamic effects through impulse-response analysis. The results indicate economically meaningful cointegration, implying that external prices and domestic aggregates are linked by long-run restrictions. A positive coffee-price shock produces heterogeneous real effects: the response of aggregate GDP is modest and short-lived, while agricultural GDP reacts more strongly and persistently. The shock propagates mainly through external and nominal channels—especially the exchange rate and terms of trade—whereas consumer-price pass-through is present but comparatively moderate. These findings contribute to the commodity-shock literature by providing sector-sensitive evidence for an agricultural export shock and by clarifying the mechanisms through which coffee-price movements propagate to domestic activity and prices in a small open agricultural economy.

Economies doi: 10.3390/economies14050155

Authors: Elton Chinyanga Lwazi Senzo Ntshangase

Despite the rapid financial expansion over the past two decades, South Africa’s economic growth has remained sluggish, raising concerns about the disconnect between financial sector development and overall economic performance. This study aims to investigate the relationship between financialization and economic growth in South Africa using three proxy variables, finance, insurance, real estate, and business services as a percentage of GDP; money supply (M3) as a percentage of GDP; and credit to the private sector as a percentage of GDP, alongside a composite financialization indicator. Using quarterly time-series data from 1994Q1 to 2025Q2, this study employs the autoregressive distributed lag (ARDL) approach to examine both short- and long-term dynamics and cointegration between financialization and economic growth. The empirical findings reveal that financialization exerts a positive and statistically significant influence on South Africa’s economic growth. Meanwhile, the estimation results reveal that financialization has a positive and highly significant impact on economic growth in South Africa, demonstrating the need for policies that promote and enhance its effects.

Economies doi: 10.3390/economies14050154

Authors: Amirreza Kazemikhasragh

This study investigates the direct impact of financial repression on economic growth in the Central African Economic and Monetary Community (CEMAC) and the West African Economic and Monetary Union (UEMOA) using a lagged composite repression index and panel fixed-effects regressions. Contrary to theoretical expectations, lagged repression exhibits a significantly positive association with GDP growth in the main model, with robustness checks confirming no negative direct effect. The findings suggest that in pegged currency unions, repression may support growth through public channels or forced savings, offsetting private crowding-out, while capital formation remains a key driver. This effect, contrasting with repression’s negative impact on investment, highlights union-specific resilience and calls for calibrated reforms to balance stability with deepening.

Economies doi: 10.3390/economies14050153

Authors: Favourate Yelesedzani Mpofu Sharon R. T. Chilunjika

Sub-Saharan African health systems face critical funding challenges due to declining foreign aid, mounting debt and increasing disease burdens. Traditional financing mechanisms have proven inadequate, necessitating the exploration of innovative domestic revenue mobilization (DRM) strategies. This paper contributes to the health economics literature by examining the use of innovative tax models as DRM strategies for sustainable health financing in Sub-Saharan Africa, using the fiscal space for health framework. This narrative review synthesizes peer-reviewed articles, policy documents, and grey literature published between 2010 and 2025. The review identifies four promising innovative models: health taxes (tobacco, alcohol, sugar-sweetened beverages), environmental levies (pollution, carbon, plastic), digital taxation (digital services taxes, mobile money taxes, Value Added Tax (VAT) on digital services) and resource extraction taxes. The evidence demonstrates significant revenue generation potential while achieving public health and environmental co-benefits. However, critical implementation challenges persist: weak administrative capacity, poor governance quality, equity concerns and extensive informality and economic diversity. The paper recommends strengthening tax administration through digital infrastructure investment and capacity building, implementing progressive tax design with targeted exemptions, enhancing transparency and linking tax revenue to health service delivery, and tailoring reforms to country-specific contexts while learning from regional experience.

Economies doi: 10.3390/economies14050152

Authors: Husam Mostafa Duraisamy Arumugasamy Nisha Ashokan

This study re-examines the monetary “black box” in India by investigating whether monetary-policy transmission is state-dependent across different interest-rate environments. Using quarterly data spanning 1993Q1–2024Q2, it constructs a Taylor rule-based monetary-policy shock to mitigate the endogeneity of raw policy rates and estimates dynamic discrete-threshold regressions with endogenously determined regimes. The results provide strong evidence of nonlinearity and structural instability in India’s transmission process. For real output, the weighted average call money rate (WACR) emerges as the more informative threshold variable, while wholesale price inflation is more effectively segmented by the 91-day Treasury bill yield. The findings show that the contractionary effect of monetary policy on output is most evident in the intermediate-rate regime, whereas low- and high-rate regimes exhibit weaker or counterintuitive short-run responses, consistent with crisis accommodation, delayed pass-through, and state-specific frictions. For inflation, monetary tightening is associated with a short-run price puzzle in low- and intermediate-yield regimes but produces the expected disinflationary effect in the high-yield regime. Across channels, the credit and asset-price channels matter selectively for output, while the exchange-rate channel is the most relevant for inflation only in the intermediate regime. Overall, the evidence suggests that monetary-policy transmission in India is regime-dependent and that policy assessment should distinguish between operating-rate conditions and broader market-rate regimes.

Economies doi: 10.3390/economies14050151

Authors: Thao Huong Phan Thao Viet Tran Trang Mai Tran

Vietnam’s exports expanded dramatically from $14.5 billion in 2000 to $405 billion in 2024, elevating the country to the world’s 22nd largest exporter despite persistent global shocks. This paper introduces the application of the Causal Machine Learning Approach to Resilience Estimation (CLARE) to industry-level trade analysis, utilizing a comprehensive panel of 97 HS2 sectors from 2000 to 2024 (2425 observations) drawn from UN COMTRADE and WITS databases. We implement Double Machine Learning to estimate causal effects of the Global Financial Crisis (2008–2009) and COVID-19 pandemic (2020–2021) on export growth. Results reveal stark industry disparities: electrical machinery (HS85) exhibits exceptional resilience, fueled by 72% high-technology content and low product concentration, while knitted apparel (HS61) proves highly vulnerable. Fixed effect regressions substantiate core hypotheses: a 10-percentage-point increase in high-tech share elevates the resilience index by 0.031 points (approximately 4.1% relative to the sample mean); a one-standard-deviation reduction in product HHI (0.14 units) yields a 0.026-point gain (3.6% relative); and each additional FTA contributes 0.047 points (approximately 6.2% relative), with all estimates significant at conventional levels. Robustness encompassing alternative learners, detrended outcomes, and synthetic controls upholds findings. Policy recommendations center on accelerating high-tech global value chain integration—targeting semiconductors and electric vehicles—while optimizing CPTPP and EVFTA utilization (currently 35%) and mitigating US–China market concentration (45% of exports). These insights chart pathways for Vietnam’s Vision 2045 high-income ambition amid intensifying geopolitical and climate risks, providing a replicable framework for other export-reliant emerging economies.

Economies doi: 10.3390/economies14050150

Authors: Sadokat Khalikchaeva Yuldoshboy Sobirov Daniyor Kurbanov Nuriddin Shanyazov Nilufar Nabiyeva Samariddin Makhmudov Jurabek Kuralbaev

This study investigates the determinants of GDP per capita across 26 European Union member states over the period of 2006–2024, with a particular focus on entrepreneurship, institutional quality, and macroeconomic factors. Given the presence of long-run income differences across EU countries, the analysis explicitly accounts for structural heterogeneity in economic development and institutional capacity. To ensure robust estimation in the presence of cross-sectional dependence and slope heterogeneity, the study employs advanced panel econometric techniques, including tests for cross-sectional dependence, unit roots, and cointegration. Long-run relationships and short-run dynamics are estimated using the Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) model, complemented by robustness checks based on the Augmented Mean Group (AMG) and Common Correlated Effects Mean Group (CCEMG) estimators. In addition, the Method of Moments Quantile Regression (MMQR) is applied to capture heterogeneity across different points of the income distribution, thereby reflecting long-run income disparities among EU member states. The empirical results confirm the existence of a stable long-run equilibrium relationship among the variables. The baseline CS-ARDL estimates indicate that institutional quality, entrepreneurial activity, trade openness, and government expenditure exert positive and statistically significant effects on GDP per capita, while financial development exhibits a negative effect and foreign direct investment remains insignificant. In the short run, entrepreneurship and trade openness contribute positively to GDP per capita, whereas government expenditure and credit expansion generate contractionary effects. The robustness analysis using AMG and CCEMG estimators largely supports these findings, as the direction of the coefficients remains consistent across alternative specifications, although some variation in statistical significance is observed due to differences in the treatment of cross-sectional dependence and unobserved common factors. The MMQR results further reveal substantial heterogeneity across the income distribution, indicating that the effects of key determinants vary depending on countries’ long-run income levels. In particular, trade openness and institutional quality exert stronger positive effects in lower-income quantiles, while the adverse effects of excessive financial development are more pronounced in higher-income quantiles. Overall, the findings underscore the importance of promoting productive entrepreneurship, strengthening institutional frameworks, facilitating trade integration, and ensuring efficient financial intermediation to enhance GDP per capita within the European Union. The results also highlight the need for differentiated policy approaches that explicitly account for long-run income heterogeneity, structural differences, and varying institutional capacities across EU member states.

Economies doi: 10.3390/economies14050149

Authors: Raikhan Tazhibayeva Aziza Syzdykova

This study investigates the impact of oil prices and exchange rates on the manufacturing output of small and medium-sized enterprises (SMEs) in Kazakhstan using data from the period 2000 to 2023, within the framework of the ARDL model. In the Kazakhstani economy, approximately 60% of SMEs operate in the wholesale and retail trade sectors, a factor that has been taken into consideration in interpreting the effects of macroeconomic variables on SME output. The results of the long-run analysis reveal that the exchange rate has a significant and strong positive effect on SME manufacturing output. Although oil prices do not directly exert a statistically significant influence on production output, the study identifies an indirect effect of oil revenues on SME output via the exchange rate channel. In the short-run findings, both exchange rates and oil prices are found to have significant effects on production output; in particular, oil prices exhibit a positive impact in the short term, which partially reverses in subsequent periods. The error correction term indicates a rapid adjustment back to equilibrium in the long run. These results highlight the high sensitivity of SME production performance in Kazakhstan to exchange rate fluctuations and underscore the indirect influence of oil prices through exchange rate movements. The study recommends enhancing the financial resilience of SMEs, minimizing exchange rate risks, and closely monitoring changes in energy prices. Furthermore, it suggests the development of policies aimed at promoting SMEs’ involvement in foreign currency-generating activities, as well as protecting enterprises in the wholesale and retail sectors against price volatility. In this context, the study makes a valuable contribution by providing a comprehensive evaluation of the effects of macroeconomic variables on SME manufacturing output.

Economies doi: 10.3390/economies14050148

Authors: Qingling Wu Mingtao He Yiliang Li Bishan Zou

In the original publication [...]

Economies doi: 10.3390/economies14050147

Authors: Ismail Yusubov Arnold Csonka

As the foreign direct investment (FDI)-driven catch-up model of eight Central and Eastern European (CEE-8) economies approaches its limits, strengthening the export capacity of small and medium-sized enterprises (SME) may play an important role in sustaining economic convergence within the European Union (EU). Despite deep integration into EU production networks, domestic SME participation in international trade remains limited. In this context, digitalization is increasingly seen as a factor that may reduce information, coordination, and administrative barriers associated with SME cross-border trade. This study examines how different dimensions of digitalization relate to intra-EU export performance of SMEs in the CEE-8, conceptualizing digitalization across three distinct but interacting layers: firm-level digital adoption, societal digital usage, and the institutional digital environment. Using a balanced panel dataset covering 2018–2023, the analysis employs a one-way fixed-effects estimator with wild cluster bootstrap inference to address the small-cluster setting. Results indicate that societal digital usage and digital public services for businesses are strongly and positively associated with SME intra-EU export performance. Firm-level digitalization shows a more complex pattern: internal digital tools display delayed positive associations after a maturation period, while e-commerce participation is consistently negatively associated with aggregate export volumes. Robustness checks using Driscoll-Kraay standard errors and alternative functional forms confirm the stability of the core findings. The results suggest that strengthening digital foundations and reducing cross-border digital frictions can support more effective CEE-8 SME participation in the EU Single Market.

Economies doi: 10.3390/economies14040146

Authors: Johnny Accary Jessica Abou Mrad Nour Mohamad Fayad

This paper provides a comparative analysis of the economic crises in Argentina and Lebanon to derive policy-relevant lessons for the design of IMF-supported adjustment programs in fragile economies. Using a structured comparative case study approach, the study examines crisis dynamics, policy responses, and socioeconomic outcomes across both countries, with particular attention given to exchange rate collapse, banking sector distress, public debt, inflation, unemployment, and poverty. The findings suggest that programs centered primarily on macroeconomic stabilization and fiscal austerity, without adequate attention to institutional capacity, social protection, and debt restructuring, risk deepening economic contraction and social vulnerability. The Argentine experience shows that IMF-supported adjustment in institutionally fragile environments may fail to restore confidence or deliver sustainable recovery when reform sequencing is weak and complementary domestic policies are absent. For Lebanon, where the crisis is deeper and compounded by governance failures and geopolitical instability, IMF engagement appears necessary but insufficient on its own. The paper concludes that a sustainable recovery requires a hybrid strategy combining external financial support with country-specific reforms, including exchange rate unification, banking sector restructuring, debt resolution, stronger governance, and targeted social protection.

Economies doi: 10.3390/economies14040145

Authors: Pawoumodom M. Takouda Mohamed M. S. Abdulkader Mohamed Dia

Efficiency refers to the performance level corresponding to using minimal inputs to achieve the maximum possible outputs. Despite its importance to the Canadian economy, such performance assessments has rarely been undertaken in the hardware retail industry in recent years. We present the results of a recent study of the relative efficiencies for three major chains of hardware and renovation retail stores operating in Canada (Home Depot, Lowe’s and Rona). We use the classic and bootstrap data envelopment analysis (DEA) models to measure performance levels over the 22 years from 2000 to 2021. Overall, the firms exhibited high efficiency during this period, and operations management was the primary source of inefficiency. However, an analysis of trends over the 22 years shows that all three companies experienced periods of declining efficiency at the beginning of the study period, followed by a phase of recovery that appears to have accelerated towards the end of the study period. Our longitudinal analysis also indicates that recent shocks and crises have impacted the firms. The succession of crises at the end of the 2000s, the 2007 forestry crisis in Canada, and the 2008 global financial crisis led to the lowest period of efficiency for all the firms, from which they started rebounding in 2011. The specific impact on Rona can explain Lowe’s acquisition of Rona in 2015. However, such a move did not seem to have had a significant improvement beyond accelerating a recovery that had started a few years earlier. This may explain Lowe’s sale of all its Canadian operations in 2022, leading to a new firm called Rona+. Finally, the COVID-19 pandemic also seems to have had a similar effect: accelerating the recovery from the 2008 financial crisis that the firms had started in 2011.

Economies doi: 10.3390/economies14040144

Authors: Hiroyuki Taguchi Ni Lar

Global value chains have recently changed structurally (“servicification”)—that is, service sectors’ involvement in global value chain processes has become more intensive. We quantify services trade restrictions’ contribution to underdevelopment of global value chain servicification across Asian economies—an underexplored area. The study applies the “structural” gravity trade model and constructs panel data based on the 2025 Trade in Value Added and the Services Trade Restrictiveness Index database developed by the Organization for Economic Co-operation and Development. The empirical analysis covers five major service sectors—trade, transport, I&C, finance, and professional services. First, global value chain servicification remains relatively underdeveloped in most emerging and developing Asian economies, particularly across several service categories. Second, services trade restrictions’ presence significantly and negatively affects global value chain servicification’s extent in these economies. Third, these restrictive measures account for approximately 30–60% of servicification’s observed underdevelopment. Regarding policy implications, removing or easing such trade restrictions could substantially promote global value chain servicification, enhancing productivity and integration for emerging and developing Asian economies.

Economies doi: 10.3390/economies14040143

Authors: Wisam Bukaita Xinrui Li

This study examines dynamic interdependencies and risk transmission among major cryptocurrencies and traditional financial assets, including Bitcoin, Ethereum, U.S. equities, and gold, over the period 2017–2024. Particular attention is given to the structural shift associated with the 2024 U.S. spot Bitcoin exchange-traded fund (ETF) approval, which marked a significant milestone in the institutionalization of cryptocurrency markets. Using daily data, the analysis distinguishes volatility-driven co-movement from structural spillover effects across markets. Dependence structures are modeled using tail-sensitive Student-t copulas applied to GARCH-filtered returns to capture nonlinear and extreme co-movements, while a vector autoregressive framework combined with generalized impulse response functions and Diebold–Yilmaz connectedness measures is employed to evaluate order-invariant shock transmission dynamics across pre- and post-ETF regimes. The results reveal three main findings. First, cryptocurrencies display strong internal dependence and short-horizon contagion, with Bitcoin consistently acting as the dominant transmitter of shocks to Ethereum over an approximately three-day transmission window. Second, linkages between cryptocurrencies and equity markets remain moderate and largely regime-dependent rather than indicative of persistent structural spillovers. Third, gold remains weakly connected throughout the sample, maintaining its role as a diversification asset. Portfolio analysis further indicates that including Bitcoin can reduce portfolio variance by 4–7% and Value-at-Risk by up to 5%, although economic gains are sensitive to transaction costs. Overall, the findings suggest that cryptocurrencies function as a partially segmented asset class, offering conditional diversification benefits despite increasing institutional adoption.

Economies doi: 10.3390/economies14040142

Authors: Goran Lalić Dragana Trifunović

This paper examines economic and institutional convergence between EU Core, EU New, and Western Balkan countries over the period 2004–2023 using a comprehensive panel dataset and multiple convergence frameworks. Evidence of absolute β-convergence is found, although at a slow pace, while conditional specifications show that structural and institutional factors explain growth differences; institutional quality appears to affect growth primarily through direct effects rather than through significant interaction-based β-convergence. A Principal Component Analysis-based Institutional Index (PC1) explains 90% of the variance in institutional quality, highlighting its role in shaping cross-country growth differentials rather than directly influencing convergence speed. Group-specific models reveal heterogeneous convergence paths across European regions. EU Core economies exhibit relatively stable convergence patterns, reflecting their proximity to steady-state income levels. In contrast, EU New and Cohesion Economies do not display statistically significant β-convergence, suggesting that catch-up processes are uneven and not uniformly driven by initial income differences. Western Balkan economies show weak and limited convergence patterns, reflecting persistent structural and institutional constraints. Robustness tests (FE/RE, Hausman, VIF, Breusch–Pagan, residual diagnostics) confirm the validity of the results. Findings suggest an important role of institutional quality in supporting long-term growth and the accession process of the Western Balkans. Policy implications highlight the importance of governance reforms, human capital development, and EU integration mechanisms in accelerating convergence.

Economies doi: 10.3390/economies14040141

Authors: Athanasia Dimitriadou Theophilos Papadimitriou Periklis Gogas

This study forecasts inbound tourism demand for the United Kingdom, using monthly data from February 1989 to February 2020. In the empirical analysis, we evaluate and compare the performance of five machine learning models (decision trees, random forests, XGBoost, and support vector regression with the RBF and linear kernels) against a more traditional linear SARIMA regression model. Forecasting performance metrics included MSE, RMSE, MAE, R2, and MAPE. The SVR RBF kernel model achieves the highest accuracy, with an MAPE of 0.014% on the training set. To enhance model interpretability, feature importance analysis is applied to identify the most influential predictors of tourist arrivals. This research offers significant policy implications, aiding government policymakers and private industry stakeholders in optimizing their planning and decisions, deploying better long-term business strategies and tourism-related services, and optimizing the allocation of public and private resources to support the tourism sector.

Economies doi: 10.3390/economies14040140

Authors: Qian Hu Yong Chen Lu Zhao

This paper utilizes panel data of Chinese A-share listed manufacturing firms from 2006 to 2022 and measures regional digital infrastructure by the number of internet broadband access ports per capita. It systematically examines the moderating role of digital infrastructure in the relationship between labor protection policies and firms’ labor productivity. The findings are as follows: (1) Digital infrastructure exhibits a positive moderating effect on the relationship between the Labor Contract Law and firms’ labor productivity. This conclusion remains generally robust across multiple robustness tests and endogeneity treatments, and the direction of the results remains consistent after applying an instrumental variable approach to alleviate endogeneity concerns. (2) The digital transformation channel exhibits a negative relationship, indicating that compliance pressure associated with the institutional reform generates a short-term “crowding-out effect” on firms’ digital investment; the human capital channel shows a positive relationship, indicating that digital infrastructure strengthens the institutional effect by improving the level of urban human capital. (3) The moderating effect is particularly pronounced in cities with strong digital industry foundations, abundant fiscal resources, and firms that have not received government digital subsidies. These results provide empirical support for optimizing the supporting environment of labor protection policies, accelerating digital infrastructure development, and enhancing enterprise adaptability to institutional changes.

Economies doi: 10.3390/economies14040139

Authors: Myriam Alexandra Urbina Poveda Helen Magdalena Gómez María Elena Jerez Calero Erick Cuenca Arcenio Córdova Víctor Cuenca

This paper examines the effects of public infrastructure spending across Ecuadorian cantons on adequate employment and the multidimensional poverty rate over the period 2008–2022, assessing whether such spending operated as a mechanism of convergence. The analysis is grounded in the hypothesis that infrastructure investment yields stronger effects in cantons characterized by lower initial levels of development. The coefficient of primary interest, associated with the interaction between low initial development and infrastructure expenditure, takes a value of −0.9542, which theoretically indicates a substantially larger impact on outcome variables in lagging cantons. This pattern is consistent with convergence theory and with the notion of investment spillovers, often described as a trickle-down process of development. Nevertheless, the estimated effect is marginally significant at the 10% level. In light of these results, the discussion revisits the convergence hypothesis by emphasizing the role of endogenous and institutional factors in shaping inclusive development across Ecuadorian cantons. The discussion underscores the importance of public expenditure quality in Latin America (LATAM) as a critical factor impacting the region’s economic growth, social equity, and overall development.

Economies doi: 10.3390/economies14040138

Authors: Tulkin Imomkulov Sardor Samiyev Nuriddin Shanyazov Zokir Mamadiyarov Mohichekhra Kurbonbekova Jurabek Kuralbaev Oybek Odamboyev

This study explores the drivers of economic growth in the BRICS economies—Brazil, Russia, India, China, and South Africa—over the period 1994–2024, focusing on the roles of digital infrastructure and financial development. Using a balanced panel, we examine how internet connectivity and access to credit shape growth, both independently and in combination, while accounting for gross fixed capital formation, urbanization, and government expenditure. Given the macro-panel structure, which exhibits heteroskedasticity, serial correlation, and cross-sectional dependence, we employ robust estimation techniques, including Driscoll–Kraay standard errors (DKSE), Feasible Generalized Least Squares (FGLS), and Panel-Corrected Standard Errors (PCSE). To capture potential heterogeneity across different growth scenarios, we further apply the Method of Moments Quantile Regression (MMQR) as a robustness check. Our findings show that both internet connectivity and financial development consistently promote economic growth across all main specifications. Importantly, the interaction between these two factors is also significant, indicating that the benefits of digital infrastructure are stronger in countries with deeper financial systems, and vice versa. Among the control variables, capital accumulation and government spending positively contribute to growth, while urbanization exhibits a negative association, reflecting the structural challenges of rapid urban expansion. MMQR results confirm that these relationships hold across low-, medium-, and high-growth periods, highlighting their broad relevance. These findings highlight the synergistic role of technological and financial development and underscore the importance of integrated policies to sustain long-term, inclusive growth in the BRICS economies. This study suggests that policymakers should adopt integrated strategies that enhance digital connectivity, deepen financial development, and support productive public investment to sustain inclusive and resilient economic growth.

Economies doi: 10.3390/economies14040137

Authors: Athanasios Nazos George Konteos Grigoris Giannarakis Yakinthi Pavlaki

This paper aims to provide evidence of the impact on the minimum wage to employment in Greece over the period 2016 to 2024. The main contribution of this paper is the examination of the effects of the minimum wage during a period characterized by many difficulties and research interest not only nationwide but also across regions with high heterogeneity. The case of Greece is particularly interesting to study during this period as it provides a unique context to explore the effects of minimum wage increases on employment. Greece constitutes a distinctly singular case within the European context due to the exceptional structural characteristics of its labor market. Following a protracted economic crisis, successive waves of labor market reforms, and the additional disruptions generated by the COVID-19 pandemic, Greece provides an illustrative, and in many respects unique, example of how extensive policy interventions interact with a gradually recovering economy and persistently elevated unemployment levels. Overall, the results strongly indicate that there is little to no impact of the minimum wage on employment and the findings vary considerably across the different regional contexts. Finally, the DiD methodology used supports the credibility of the findings and suggests that the lack of impact of the minimum wage is not due to model specification or timing bias.

Economies doi: 10.3390/economies14040136

Authors: Besma Hamdi Awatef Louhichi Olfa Gammoudi Mouna Aloui

A strong transportation infrastructure is critical in advancing ICT trade by facilitating the efficient movement of goods and services. This efficiency enhances supply chains and attracts greater foreign direct investment, ultimately supporting technological development and boosting the economy. This article evaluates the relationship between transportation infrastructure (TI), information and communication technology trade openness (ICT trade), foreign direct investment (FDI), and economic growth (GDP) in Saudi Arabia from 1990 to 2023. Using the Autoregressive Distributed Lag (ARDL) model, we found that ICT trade has a statistically significant positive effect on long-run GDP growth. However, in the short run, ICT trade has a positive but non-significant impact on GDP growth. Additionally, the results show that TI has a statistically significant negative effect on short-run GDP growth. Moreover, the non-linear Threshold Regression model results show a threshold value for information and communication technology trade openness (ICT trade) of approximately 0.4051. Specifically, the findings indicate that increased ICT trade reduces the negative impact on economic growth beyond a certain threshold. This study is highly significant for Saudi Arabian decision-makers, as it highlights the roles of transportation infrastructure and ICT trade in attracting FDI and bolstering the economy.

Economies doi: 10.3390/economies14040135

Authors: Aziza Mergenbayeva Kulyanda Nurasheva Aizhan Abishova Gulnara Urazbayeva

The manuscript aims to assess the scale of shadow economic processes within the non-observed economy, focusing on the self-employment sector, which is insufficiently reflected in national statistics. The research methodology includes an analysis of the conceptual foundations of the shadow economy, decomposition of its components, identification of factors negatively affecting the economy, development of an algorithm for sociological research, and the selection of appropriate models for evaluating the non-observed economy. The study formulates the concept of the shadow economy and shows that shadow business activity in Kazakhstan contributes to income inequality, hidden unemployment, and the exclusion of certain goods and services from official GDP statistics. Using statistical data from 2005 to 2024 and applying methods such as system and statistical analysis, modeling approaches, and the MIMIC (Multiple Indicator Multiple Cause) and DGE (Dynamic General Equilibrium) models, the study estimates the size of the shadow sector. The results reveal insufficient statistical data on shadow activities within self-employment and SMEs. The study concludes that the most reliable assessment of the shadow economy requires an integrated methodological approach, including targeted sociological research and models that account for the influence of multiple factors on informal self-employment.

Economies doi: 10.3390/economies14040134

Authors: Abdelrahman Saeed Muhammad Ali

Climate change disproportionately threatens low- and middle-income countries, yet integrated assessments combining socio-economic fragility with physical hazards remain limited. This study quantifies multi-dimensional climate vulnerability and derives optimized adaptation policies for six representative nations (Bangladesh, Colombia, Kenya, Morocco, Pakistan, Vietnam) by fusing socio-economic indicators with climate risk data (2000–2024). A computational framework integrating unsupervised learning, dimensionality reduction, and predictive modeling was employed. Principal Component Analysis synthesized eight indicators into a Compound Vulnerability Score (CVS), while K-Means and DBSCAN identified distinct vulnerability regimes. XGBoost quantified driver importance, and Graph Neural Networks captured systemic interconnections. XGBoost identified projected drought risk (31.2%), precipitation change (18.1%), and poverty headcount (14.3%) as primary drivers. Graph networks demonstrated significant risk amplification in African nations (Morocco SRS: 0.728–0.874; Kenya SRS: 0.504–0.641) versus damping in Asian countries. A Reinforcement Learning (RL) agent was trained using Deep Q-Networks with experience replay to optimize intervention portfolios under budget constraints. The RL policy achieved a 23% reduction in systemic risk compared to uniform allocation baselines, generating context-specific priorities: drought management for Morocco (score 50) and Pakistan (40); poverty alleviation for Kenya (40); coastal protection for Bangladesh (40); agricultural resilience for Vietnam (35); and institutional capacity building for Colombia (50). In conclusion, socio-economic fragility non-linearly amplifies climate hazards, with poverty and drought risk constituting critical vulnerability multipliers. The AI-driven framework demonstrates that targeted interventions in high-sensitivity systems maximize systemic risk reduction. This integrated approach provides a replicable, evidence-based foundation for strategic adaptation finance allocation in an increasingly uncertain climate future.

Economies doi: 10.3390/economies14040133

Authors: Abimanyu Hendi Asyono Palupi Lindiasari Samputra Hary Djatmiko

Critical minerals are central to industrial strategies in the Global South, but evidence on how such policies reshape domestic production is limited. This paper maps Indonesia’s nickel ecosystem before and after the 2014 export ban using input–output multipliers and labor intensity from the 2010, 2016, and 2020 input–output tables. We provide a descriptive account of nickel’s evolving economic trajectory during the downstreaming push. Three patterns stand out. Forward linkages declined from 16 to 8 and backward linkages moved from 75 to 73, suggesting a narrower structure with greater specialization in higher value, more capital-intensive activities. Output multipliers rose most in sectors that support the electric vehicle supply chain, including professional and technical services, machinery, fabricated metals, transport equipment, energy, and finance. In contrast, the labor multiplier fell from about 6514 to 3366 jobs per IDR 1 trillion of final demand, implying a higher value added alongside lower employment intensity. Overall, downstreaming appears to work through structural concentration and growth in complementary sectors rather than broad-based diversification. Complementary policies in skills, regional development, and energy infrastructure are therefore critical for inclusive industrial transformation.

Economies doi: 10.3390/economies14040131

Authors: Montchai Pinitjitsamut

Population aging in middle-income economies produces macroeconomic and distributional consequences that aggregate frameworks cannot detect. This paper develops a multi-household CGE model calibrated to a 26-sector Social Accounting Matrix for Thailand (2024) and traces the labor, saving, and fiscal channels of aging across eleven counterfactual scenarios. Three findings emerge. First, aging’s primary macroeconomic cost operates through capital accumulation, not output contraction: investment falls seven times faster than the GDP under a savings-driven closure, because middle-aged households—the economy’s dominant net savers—compress lifecycle saving in response to aging. The saving channel alone amplifies the labor supply shock four-fold (range: 3.5–4.5). Second, aging can raise elderly welfare. When elderly households retain labor market attachment, wage gains from tighter factor markets outweigh declining capital returns—a welfare reversal invisible to representative agent and OLG frameworks by construction. The critical labor income threshold is αL∗=35.5% (range: 34.8–36.2%), confirmed across all participation increments tested (elderly welfare gain: THB 341–521 million). Third, no single instrument satisfies efficiency and equity simultaneously. Pension transfers crowd out investment nonlinearly above 12 percent of tax revenue (range: 10–14%); health demand expansion is the decisive complement that converts redistribution into a near-Pareto improvement. Policy complementarity is an empirical necessity, not a theoretical refinement. Collectively, these results reframe demographic aging as a factor price redistribution mechanism whose welfare incidence is determined by the cohort-level income composition—with direct implications for aging policy in middle-income economies facing rapid demographic transitions under tighter fiscal constraints than for advanced economies encountered at equivalent demographic stages.

Economies doi: 10.3390/economies14040132

Authors: Burak Buyun İlayda İsabetli Fidan

This study investigates the structural relationship between inflation and key macroeconomic fundamentals in Türkiye, an emerging economy characterized by persistently high and divergent inflation dynamics. Using monthly data for the 2011–2024 period, we apply the Kapetanios, Shin, and Snell (KSS) nonlinear cointegration framework, which captures asymmetric adjustment dynamics that standard linear models fail to detect. The aggregate model reveals no long-run cointegration between inflation and monetary and fiscal fundamentals, indicating that conventional transmission channels have weakened and inflation has become decoupled from its traditional determinants. Pairwise analyses show that this decoupling is not complete; rather, the relationship persists in a fragmented, nonlinear, and variable-specific manner. Short-run Granger causality tests further reveal that only fiscal expansion and real money supply retain explanatory power over inflation, while the policy rate proves ineffective. Collectively, these findings indicate that inflation in Türkiye has increasingly evolved into an endogenous and self-reinforcing process, shaped more by policy incoherence than by any single macroeconomic driver. Restoring a coordinated, rule-based monetary and fiscal policy framework emerges as a necessary condition for re-establishing the link between inflation and macroeconomic fundamentals and ensuring durable price stability.

Economies doi: 10.3390/economies14040130

Authors: Yong Chen Qian Hu Haiming Song

Against the backdrop of an accelerated green transition and increasingly stringent climate policies, climate transition risk has emerged as a significant exogenous shock to the financial system. Using a panel of 57 listed commercial banks in China over the period 2010–2024, this study investigates whether and how climate transition risk shapes bank risk-taking behavior and identifies the mechanisms involved. Empirical evidence shows that rising climate transition risk significantly lowers bank risk-taking, a conclusion that holds consistently under various endogeneity and robustness checks. Second, the evidence suggests that climate transition risk may indirectly reduce bank risk-taking by impairing growth capacity and increasing operational costs per unit. Third, moderating effect analysis reveals that higher levels of digital transformation and the implementation of the Paris Agreement help alleviate the adverse effects of climate transition risk, whereas increased economic policy uncertainty amplifies this effect. Fourth, heterogeneity analysis shows that large banks exhibit greater resilience, while banks with higher carbon-intensive exposure are more sensitive to climate transition risk. Overall, these findings provide empirical evidence and policy implications for enhancing climate-related financial regulation and facilitating the green transformation of the financial system.

Economies doi: 10.3390/economies14040129

Authors: Zhongrui Lu Jie Hu Jianchao Luo

The reallocation of production factors, particularly labor, is central to understanding economic development and household welfare. This paper investigates how the transfer of farmland, a fundamental shift in factor endowment, affects rural household financial vulnerability, with a specific focus on the mediating role of labor mobility. While factor market liberalization is theorized to enhance efficiency, the micro-level pathways through which land transactions influence financial resilience remain underexplored. Utilizing a unique household survey dataset from Shaanxi Province, China, and employing ordered Probit model alongside propensity score matching (PSM), the impact of farmland transfer-out on the financial vulnerability of rural households is revealed. The results show that farmland transfer-out significantly reduces household financial vulnerability. Mechanism analysis confirms that this effect operates primarily by releasing surplus agricultural labor and promoting its shift into non-farm employment, thereby expanding both the sectoral and geographic scope of household labor supply. Heterogeneity analysis further reveals that the responsiveness of labor mobility to land transfer is more pronounced among households with older heads, higher human capital, and stronger social networks. However, the ultimate mitigating effect on financial vulnerability is consistent across diverse household types. These findings contribute to the literature on factor market integration and household finance in developing economies and offer direct policy implications for designing land institutions and labor policies that synergistically enhance rural economic resilience.

Economies doi: 10.3390/economies14040128

Authors: Jiawen Zhou Fei Peng Qi Chen Sajid Anwar

Universities play a critical role in knowledge creation and technological innovation, serving as key drivers of regional development. However, existing research has paid limited attention to the mechanisms through which university innovation inputs translate into firm-level performance, particularly in the context of science and technology corridors in emerging economies. This study investigates how university innovation resources affect enterprise performance in the G60 Science and Technology Corridor within China’s Yangtze River Delta, one of the country’s most dynamic innovation regions. Using a panel dataset of 55 universities across nine cities from 2008 to 2017, we employ spatial analysis and fixed-effects panel regression models to examine the relationship between university innovation inputs and firm performance and further explore the mediating roles of local human capital and firm R&D investment. The results show that university innovation inputs significantly enhance enterprise performance, although excessive human resource inputs exhibit a negative effect on both short-term and long-term outcomes. Local human capital and firm R&D investment serve as key mediating mechanisms, with input and output resources influencing enterprise performance through distinct pathways. Heterogeneity analysis reveals that non-state-owned enterprises and small- and medium-sized enterprises derive greater long-term benefits from university resources. These findings contribute to the literature by clarifying the conceptual distinction between university innovation inputs and outputs, and by demonstrating the micro-level mechanisms—R&D investment and human capital—through which university-generated knowledge affects firm performance. The results also provide empirical evidence from an emerging economic context, extending the applicability of knowledge spillover and absorptive capacity theories. Policy implications include optimizing university human resource allocation, strengthening university–enterprise collaboration, and providing targeted support for non-state-owned enterprises and SMEs. Future research may extend the analysis to include institutional factors and university heterogeneity.

Economies doi: 10.3390/economies14040127

Authors: Lavinia Mastac Raluca Andreea Trandafir Liliana Nicodim

This study examines how digitalization and institutional quality jointly influence the size and dynamics of the shadow economy across EU member states. It adopts an integrated framework in which digital capacity is treated as an operational extension of state capacity that can either complement strong institutions or compensate for institutional weaknesses. The empirical analysis is based on a two-dataset panel covering 27 EU countries over the periods 2013–2022 and 2017–2022. Institutional quality is measured using the Worldwide Governance Indicators, while digitalization is captured through detailed indicators from the Digital Economy and Society Index. Fixed-Effects models with Driscoll–Kraay standard errors are employed, alongside interaction and nonlinear specifications. Results show that institutional quality is consistently associated with lower levels of the shadow economy, but its effect exhibits diminishing returns at higher levels of governance, indicating institutional saturation. Digitalization effects are domain-specific. In isolation, both citizen- and business-oriented digital services show a positive association with the shadow economy, a finding termed the Digitalization Paradox, reflecting a phase where technological facilitation of informal activity outpaces regulatory adaptation. However, their interaction with institutional quality reveals divergent mechanisms. Citizen-oriented services tend to substitute for weaker governance, while business-oriented services complement strong institutional frameworks. The findings indicate that digitalization serves as an institutional amplifier whose final impact on the shadow economy, whether formalizing or facilitating, is dictated by the maturity of the host institution.

Economies doi: 10.3390/economies14040126

Authors: Qian Jiang Yi Tu Jun Tu

The rapid expansion of the digital economy is reshaping the global production and trade system, bringing new opportunities for developing economies seeking to enhance their international competitiveness, while also posing structural challenges. This study focuses on China, a typical emerging economy, and uses provincial panel data from 2015 to 2024 to empirically examine how digital transformation and technological innovation jointly affect foreign trade competitiveness. The core variables are measured as follows: The digitalization level is constructed using principal component analysis (PCA) based on three dimensions: digital infrastructure, digital industrialization, and industrial digitization; technological innovation is proxied by the logarithm of technology market transaction volume. This study employs a fixed-effects model with interaction terms to estimate the independent effects of digitalization and technological innovation and to explore their interaction within the framework of the digital economy. The empirical results show that both digital transformation and technological innovation have a significant positive impact on foreign trade competitiveness. Specifically, a 10-point increase in the digitalization index is associated with an approximately 0.10-unit increase in the trade competitiveness index, and a 1% increase in technological innovation input is associated with an increase of 0.032–0.042 units. However, their interaction coefficient is significantly negative (−0.001, p < 0.01), indicating a substitution effect: an increase in technological innovation investment weakens the marginal contribution of digitalization to export competitiveness, and vice versa. Further heterogeneity analysis shows that the direct effects of digital transformation and technological innovation are more significant in less developed regions, while the substitution effect is stronger in economically developed regions. The findings suggest that policies promoting digital transformation and technological innovation should avoid a uniform approach and instead adopt coordinated and phased strategies that are suitable for regional development conditions. By providing new empirical evidence on the interaction between digital economy development and innovation investment, this study enriches the existing literature and offers policy implications for emerging economies seeking to achieve sustainable foreign trade development under increasing global trade uncertainty.

Economies doi: 10.3390/economies14040125

Authors: Özkan İmamoğlu

This study examines the asymmetric responses of stock market indices in Türkiye and Kazakhstan to oil price shocks during the 2010–2025 period. Using the Nonlinear Autoregressive Distributed Lag (NARDL) model, the study decomposes the nonlinear effects of oil price fluctuations on financial markets. Empirical findings reveal that in Türkiye, a net oil importer, the stock market exhibits a dual-sensitivity: while exchange rate dynamics (2.34) remain the dominant driver, oil price increases (−0.12) exert a direct and statistically significant negative pressure. In contrast, Kazakhstan, a net oil exporter, shows a high vulnerability to oil price decreases (−1.05) at the 1% significance level, confirming a strong asymmetric structure (p = 0.0122). Furthermore, the error correction speed is significantly higher in Türkiye (28%) than in Kazakhstan (4%), indicating divergent market efficiency and recovery mechanisms. These results demonstrate that financial market reactions to external shocks differ fundamentally based on energy trade structures. The findings suggest that oil-importing countries must prioritize exchange rate stability, while oil-exporting nations must develop specific policy buffers against the persistent downside risks of global energy cycles.

Economies doi: 10.3390/economies14040124

Authors: Antun Marinac Barbara Pisker

Digital transformation is increasingly reshaping how tourism destinations enhance service quality and strengthen competitive positioning, particularly in developing economies characterized by heterogeneous digital maturity and structural constraints. This study develops and empirically tests a conceptual model examining the relationship between destination digital transformation, tourism supply quality, and destination competitiveness, with a specific focus on the mediating role of quality-oriented tourism supply. Survey data were collected from 242 tourism stakeholders and analyzed using hierarchical regression and bootstrapped mediation analysis (PROCESS Model 4, 5000 samples). The results show that digital transformation has a significant positive total effect on destination competitiveness (β = 0.48, p < 0.001), explaining 56% of the variance in competitiveness (R2 = 0.56). However, a substantial portion of this effect is transmitted indirectly through tourism supply quality. The mediation analysis confirms a statistically significant partial mediation effect, with approximately 41% of the total effect operating through quality-oriented mechanisms. The findings demonstrate that digital transformation enhances competitiveness primarily when embedded within structured quality management, online reputation management, and smart governance practices, rather than through technological adoption alone. The study contributes to the literature by integrating digital transformation and tourism supply quality into a unified competitiveness framework tailored to developing economy contexts and provides practical guidance for policymakers and destination managers seeking inclusive and sustainable growth through quality-oriented digital strategies.

Economies doi: 10.3390/economies14040122

Authors: Paidi Paidi

This study examines the impact of financial inclusion on income inequality across 33 provinces in Indonesia from 2015 to 2023, while controlling for human development and investment-related factors. Specifically, it investigates the effects of the Financial Inclusion Index (FII), Human Development Index (HDI), foreign investment (FI), and domestic investment (DI) on provincial income inequality. This study used balanced-panel data for each province and year. Employing a dynamic panel data approach, this study utilizes the Generalized Method of Moments (GMM) estimator to address potential endogeneity, unobserved heterogeneity, and dynamic persistence in income inequality. The empirical findings indicate that financial inclusion, as measured by the Financial Inclusion Index, has a statistically significant negative effect on income inequality, suggesting that greater access to formal financial services contributes to a more equitable income distribution. Similarly, the Human Development Index is found to reduce income inequality, highlighting the importance of human capital development in mitigating income disparities. In contrast, foreign investment and domestic investment exhibit positive and significant effects on income inequality, implying that investment inflows may disproportionately benefit higher-income groups. Overall, the results underscore a high degree of inequality in Indonesia, consistent with the lagged coefficient reaching 0.97. Therefore, inclusive policy frameworks are required to ensure that investment-driven growth is more evenly distributed across provinces.

Economies doi: 10.3390/economies14040123

Authors: Faiz ur Rehman Mohammad Ammar Ahsan Bilal Asghar Ali Saleh Alshebami Elham Alzain Abdullah Hamoud Ali Seraj

Rising non-performing assets (NPAs) remain a persistent threat to banking stability in emerging economies, including India. This study examines the role of conventional macroeconomic determinants in shaping NPA dynamics using annual panel data from 30 Indian banks over the period 2003–2022. Employing Robust Least Squares and dynamic modelling techniques, the analysis evaluates the impact of GDP growth, inflation, exchange rate movements, and repo rates, while addressing heteroscedasticity, autocorrelation, and bank-level heterogeneity. The findings indicate that currency depreciation significantly increases NPAs, whereas inflation and tighter monetary policy exert a moderating effect. GDP, however, does not exhibit a significant influence, suggesting limited macroeconomic transmission to banking asset quality. To ensure appropriate model specification, stationarity tests are conducted, guiding the inclusion of dynamic elements in the analysis. Once the model is adjusted accordingly, the results consistently highlight the relative importance of macroeconomic factors without yielding conflicting interpretations. While broader theoretical perspectives such as institutional memory and balance-sheet effects are acknowledged for contextual relevance, they are not empirically tested in this study. Overall, the findings emphasize that conventional macroeconomic variables play a meaningful, though selective, role in explaining NPA behaviour, offering clearer and more consistent insights for policy and banking practice.

Economies doi: 10.3390/economies14040121

Authors: Libby Lahar Binyam Afewerk Demena Peter A. G. van Bergeijk

This paper provides a historical perspective on comparatively low levels of trade in the Middle East and North Africa (MENA) region, focusing on studies addressing the impact of the Israeli–Palestinian conflict. Our literature review identifies best practices and reviews trade potential estimates and finds that the last year for which a relevant trade potential estimate for the region accounting for the influence of the Israeli–Palestinian conflict is available is 1999. First, we replicate the seminal study that provided the earliest estimation of trade potential. Next, we extend and update this study, using a best practice panel PPML gravity model with ex(/im)porter-year fixed effects for 76 countries (1991–2019 inclusive). Finally, we use two alternative approaches to estimate the intra-MENA trade potential that could have been reaped as a consequence of a geopolitically more stable and open Middle East (ME). In the year 2019, this ‘pot of gold’ (POG) in per cent of intra-MENA trade amounted to 10% to 54% (import-based) and 21% to 48% (export-based), substantially lower than earlier literature reports.

Economies doi: 10.3390/economies14040120

Authors: Rodney Menezes

This study examines how firms’ financial heterogeneity shapes the transmission of monetary policy to investment in Latin American economies. It develops an extended theoretical model with heterogeneous firms, calibrated for Latin American economies, and validates it empirically through local projection models. These projections are applied to both a dataset of 72 of the most representative firms from the six analyzed Latin American economies and simulated data from the theoretical model, enabling direct comparison of the results. The research yields three main findings. First, it shows that financial heterogeneity is crucial and determines how firms respond to a monetary shock. Firms with fragile structures or high levels of indebtedness tend to restrict investment following monetary expansions, whereas firms with stronger financial positions or greater distance to default tend to increase it. The aggregate effect depends on the distribution of financial structures in the economy and which group dominates. Second, a transmission mechanism is identified via a financial channel based on a price–quantity sequence. The drop in the real rate compresses spreads and raises the price of capital; if financial constraints are active, the monetary relief is used to repair balance sheets rather than to invest; otherwise, the stimulus quickly translates into investment. Finally, the study shows that ignoring heterogeneity—as in representative–agent models—leads to a significant overestimation of both the magnitude and persistence of investment responses to monetary policy shocks.

Economies doi: 10.3390/economies14040119

Authors: Gayatri Mallick Sonia Singla Suraj Kumar Mallick Netrananda Sahu Martand Mani Mishra Ayush Varun

This article investigates whether increasing economic status through adopting digital payment capabilities in Delhi fosters economic and financial inclusion among urban women street vendors in Mahila Haat. Digital freedom is a new step forward in technology for everyone. Still, a woman not only balances the social responsibilities of childbearing, caring for her children and family, and struggling with economic issues, health issues, and undernourishment, but can also balance the household job of street vending to increase self-esteem and financial independence. This research work conducted a sampling survey and applied the Kruskal–Wallis H-test with a p-value (0.05) significance level by evaluating 11 variables to investigate the relationship between the digital capabilities and economic independence of street vendors in Mahila Haat (a women’s market where the vendors are all women) in the Red Fort area of New Delhi. UPI systems were created using measurements based on a five-point Likert scale to analyze different levels of satisfaction in clusters of digital capabilities on digital platforms. Further, the ordinary least squares (OLS) method was used to estimate quality of life and social happiness in the context of digital empowerment. Digital payment systems positively influence women’s empowerment. Women vendors can adopt digital payment methods, making them economically independent. The positive relationship between women vendors and customer satisfaction before UPI use and after UPI use is also analyzed. This research will be helpful for both government and non-government organizations to provide financial assistance, informational awareness, skill development training, and advocacy for gender equality to increase women’s empowerment.

Economies doi: 10.3390/economies14040118

Authors: Widad Miliani María del Pilar Casado-Belmonte Antonio Jesus Garcia-Amate

Foreign direct investment (FDI) plays a vital role in Africa’s economic development; however, the rapidly expanding body of literature on this topic remains highly fragmented. This dispersion creates a significant research problem, obscuring structural evolution, persistent thematic gaps, and collaborative networks within the field. To address this, a bibliometric analysis is necessary, as it provides an objective, macro-level methodology capable of synthesising vast amounts of publication data and uncovering hidden intellectual structures that traditional systematic reviews cannot easily capture. Consequently, this study maps the development of FDI research in Africa by analysing and visualising scientific publications to reveal the structure, evolution, and interdisciplinary nature of the field, identifying leading scholars, collaboration networks, and core thematic areas. Using data from the Scopus database, the study examines 2003 documents through Biblioshiny and VOSviewer. The findings are presented in three sections. The descriptive analysis shows a steady rise in FDI publications from 1986 to 2024, with strong growth in the past two decades. The most productive institutions are in South Africa and Nigeria, while major contributing countries include South Africa, the United States, China, and the United Kingdom. Keyword and collaboration analyses highlight themes such as Sub-Saharan Africa, economic growth, capital flow, renewable energy, and natural resources. Ultimately, this mapping goes beyond descriptive trends to provide critical analytical insights, revealing a significant thematic shift from traditional economic paradigms toward sustainable development and environmental economics. Practically, these findings offer strategic guidance for policymakers and investors by identifying key institutional hubs and regional knowledge gaps. Scientifically, the study establishes a foundation for future research by directing attention toward underexplored, emerging issues such as climate resilience, digital transformation, and subnational FDI dynamics.

Economies doi: 10.3390/economies14040117

Authors: Derya Hekim

This study investigates whether fluctuations in the real exchange rate give rise to symmetric or asymmetric J-curve effects in manufacturing trade between Türkiye and Germany, thereby positioning the analysis within and contributing to the broader scholarly discourse on exchange rate–trade balance dynamics. Using monthly data for the period 2013M01–2025M07, the paper first estimates a linear Autoregressive Distributed Lag (ARDL) model for the bilateral manufacturing trade balance and subsequently extends the framework to a nonlinear ARDL (NARDL) specification, which explicitly incorporates symmetry and asymmetry by decomposing real exchange rate changes into positive (depreciation) and negative (appreciation) partial sums. The linear ARDL results provide no evidence of a conventional J-curve and suggest that the aggregate impact of the real exchange rate is weak and often statistically insignificant. In contrast, the NARDL estimates uncover pronounced long-run and cumulative short-run asymmetries: real depreciations of the Turkish lira are associated with a persistent improvement in the bilateral manufacturing trade balance, whereas appreciations exert weak and statistically insignificant effects, a finding that remains robust when a real effective exchange rate measure is employed. Overall, the evidence indicates that Türkiye–Germany manufacturing trade does not conform to the standard J-curve pattern. These findings suggest that trade policy should adopt an asymmetric stance toward exchange rate movements: since depreciations yield persistent trade balance improvements while appreciations produce negligible effects, policies designed to support export competitiveness should prioritize the management of depreciation episodes rather than assuming symmetric adjustment dynamics.

Economies doi: 10.3390/economies14040116

Authors: Fhulufhedzani Justice Madega Thinawanga Hangwani Tshisikhawe Thakhani Ravele Caston Sigauke

This paper compares the daily return volatility by four leading international indices: JSE Top 40, FTSE 100, Nikkei 225 and S&P/ASX 200. The return series are modelled in ARMA process, where ARMA(1,3) values are taken for JSE Top 40 and S&P/ASX 200, ARMA(0,0) for FTSE 100, and ARMA(1,2) for Nikkei 225. The volatility is modelled in APARCH and GJR-GARCH (e.g., under various conditional distributions including Student-t (STD), skewed Student-t (SSTD), generalised error distribution (GED), skewed generalised error distribution (SGED), and generalised hyperbolic distribution (GHYD)). Model selection results based on information criteria indicate that the APARCH models outperform their GJR-GARCH counterparts in all cases. In particular, the ARMA(p,q)-APARCH(1,1) with SSTD is most suitable for the JSE Top 40 and the FTSE 100. The model that best describes the Nikkei 225 is an ARMA(1,2)–APARCH(1,1) model with SGED, and the S&P/ASX 200 fits an ARMA(1,3)-APARCH(1,1) model with GHYP. Among the indices, the FTSE 100 has the highest volatility persistence, while the Nikkei 225 responds more quickly to shocks. This out-of-sample forecasting test shows that ARMA(p,q)-APARCH(p,q) provides more accurate volatility predictions, especially for JSE Top 40 and S&P/ASX 200 investors.

Economies doi: 10.3390/economies14040115

Authors: Mahmoud Odeh Mitlaq Alrefo Yvonne Lee Han Hwa Goh

This study examines the heterogeneous effects of key macroeconomic determinants on economic growth in selected MENA economies using a pooled quantile regression framework. Unlike conventional mean-based approaches, this method captures variation across different segments of the conditional growth distribution. Using annual data for eight MENA economies over the period 2000–2023, the analysis evaluates how foreign aid, budget deficits, foreign direct investment, and trade openness are associated with growth under different economic conditions. The results reveal that foreign aid and fiscal deficits are more strongly associated with growth at lower quantiles, indicating greater relevance during low-growth episodes, while their effects weaken or become insignificant at higher quantiles. In contrast, foreign direct investment shows a stronger and more consistent positive association at higher quantiles, whereas trade openness is mainly significant at the lower end of the growth distribution. These findings provide distribution-sensitive evidence on growth determinants in structurally diverse MENA economies. From a policy perspective, the results suggest that macroeconomic strategies should be tailored to country-specific growth conditions rather than relying on uniform policy frameworks across the region.

Economies doi: 10.3390/economies14040114

Authors: Xuyang Shao Shengyuan Gao Liyuan Yu Dan He

The issues of income inequality and poverty are intrinsically linked and represent persistent global governance challenges. China faced significant hurdles, including absolute rural poverty and a widening urban–rural development gap. The “Targeted Poverty Alleviation” policy (TPA), implemented from 2014 onward, employed comprehensive measures, including household registration, industrial support, and skills training. By the end of 2020, this policy successfully eradicated absolute rural poverty under the prevailing standard, contributing a Chinese solution to global poverty reduction. Beyond addressing absolute deprivation, whether this policy has impacted relative rural poverty and urban–rural inequality remains a subject of debate in existing literature. Utilizing microdata from the China Family Panel Studies (CFPS) from 2014 to 2020, this study employs the Kakwani measure to measure relative deprivation levels, thereby identifying income disparities both within rural areas and between urban and rural regions. Combining empirical tools, including a Difference-in-Differences (DID) framework, Propensity Score Matching (PSM), and Entropy Balancing method, the analysis finds that the Targeted Poverty Alleviation policy significantly curbs income inequality both within rural areas and across the urban–rural divide. Further investigation reveals that this effect operates through three primary mechanisms: promoting diversified rural livelihoods, improving incomes for impoverished households, and bridging knowledge and information gaps. Heterogeneity analysis indicates that the inequality-reducing effect of the policy is more pronounced in non-major grain-producing regions, low-income provinces, and among vulnerable groups such as the elderly, low-income individuals, and women. This study addresses the lack of detailed micro-level measurement, deepens the explanatory analysis of mechanisms and heterogeneity, and provides a basis for formulating differentiated policies in line with the vision of common prosperity.

Economies doi: 10.3390/economies14040113

Authors: Sanzidur Rahman Al-Noor Abdullah

Background: Although mega-dams play a significant role in development, providing electricity, irrigation, and flood control, perceptions of their contribution remain mixed, particularly regarding the environmental impacts. Methods: This study jointly determines perceived favorable and adverse environmental impacts of mega-dams by affected residents using a bivariate Tobit model on a clustered random sample of 300 households surveyed from (a) upstream, (b) upstream-relocated, and (c) downstream communities of the Merowe Dam in Sudan. Model diagnostic reveals that the perception of favorable and adverse environmental impacts is significantly and positively correlated, implying that univariate analyses of such perceptions are biased, thereby justifying the use of a bivariate approach. Such joint perception analysis using a bivariate Tobit model confirms that affected residents are well aware of both the positive and negative impacts of the dam, not commonly seen in the literature. Results: Results reveal significant differences in perception among communities on individual indicators of favorable and adverse environmental impacts of the dam. Education, income from farming, and relocation significantly decrease the likelihood of perceiving adverse environmental impacts whereas farmers of all farm types increase it. Selected farming categories and gain in land size after dam’s construction significantly increases the likelihood of scoring high on favorable environmental impacts whereas income from fishing significantly reduces it. Conclusions: Perception towards the favorable and adverse environmental impacts are not independent, rather significantly and positively correlated, confirming that affected residents are aware of both types of impacts of the Merowe Dam. Upstream-relocated residents are less likely to report the significant adverse environmental impacts of the dam, whereas both upstream and upstream-relocated residents are less likely to report significant favorable impacts of the dam. Policy implications: Include establishing educational institutions, allocation of agricultural land, and mitigating adverse environmental impacts by setting up community environmental monitoring programs in affected areas to boost community perception of the favorable environmental impacts of mega-dams.

Economies doi: 10.3390/economies14040112

Authors: Wulan Isfah Jamil Bambang Brodjonegoro Diah Widyawati

Routine-Biased Technological Change (RBTC) is viewed as reshaping labor markets, yet its implications for gender inequality in developing economies remain underexplored. This study examines these dynamics among formal wage workers in Indonesia from 2001 to 2019. Using stacked first-difference estimations and a dynamic shift-share decomposition, we document three interconnected patterns. First, routine displacement unfolds episodically rather than simultaneously—with relative contraction in routine cognitive jobs (2001–2005), routine manual jobs (2005–2010), and renewed routine cognitive pressures (2015–2019)—a sequence likely shaped by technological change alongside macroeconomic and institutional forces. Second, these adjustments are gender-asymmetric. Women experienced greater exposure to displacement but reallocated substantially toward non-routine interpersonal roles. This occupational upgrading is consistent with both task-based demand shifts associated with technological change and the entry of younger, more educated female cohorts. Third, employment reallocation exerted a narrowing influence on the gender wage gap, particularly in 2005–2010. However, this equalizing channel weakened over time as market valuation (wage exposure) became increasingly unfavorable to female-concentrated occupations, contributing to a renewed widening in 2015–2019. Ultimately, while residual within-task group dynamics dominate the gap’s magnitude, task-based employment and wage channels remain critical in structuring the timing and directional shifts of gender inequality in the formal sector.

Economies doi: 10.3390/economies14040111

Authors: Angeliki N. Menegaki

Since the mid-2000s, the global economy has experienced a sequence of profound shocks that have reshaped economic structures, policy priorities, and analytical frameworks [...]

Economies doi: 10.3390/economies14040110

Authors: Chaimae Ghernouk Mariem Liouaeddine

This study examines the efficiency and productivity of public education expenditure in 20 countries using Data Envelopment Analysis (DEA) and the Malmquist Productivity Index over the period 2011–2023. Focusing on science and mathematics performance at the primary and lower-secondary levels, the results show that higher public spending does not necessarily lead to better educational outcomes, highlighting the importance of efficient resource allocation. The DEA estimates reveal substantial cross-country heterogeneity in efficiency, while the Malmquist results indicate positive total factor productivity growth across all countries, driven mainly by technical progress rather than efficiency catch-up. Countries such as Morocco, Japan, Turkey, and Iran exhibit sustained productivity improvements, particularly in 2019–2023. Persistent disparities in efficiency and productivity are closely associated with differences in education policies, governance, and socio-economic contexts. Overall, the findings stress the need for efficiency-oriented education reforms to enhance performance and promote sustainable growth.

Economies doi: 10.3390/economies14040109

Authors: Hamrullah Hamrullah Nur Dwiana Sari Saudi Fitriwati Djam’an Suharwan Hamzah

Regional economic inequality remains a persistent challenge in developing economies, particularly in peripheral regions characterized by fragmented geography and uneven development. This study examines spatial spillovers in regional economic inequality by integrating spatial econometric analysis with remote sensing-based indicators. Using district-level data from Eastern Indonesia, the analysis captures how inequality is shaped by spatial interdependence and localized development patterns rather than isolated regional characteristics. Regional economic inequality is measured using a district-level relative Williamson-type index, allowing inequality to vary across space within provincial contexts. To account for spatial dependence, the study employs a spatial econometric framework and evaluates alternative model specifications. In addition to conventional economic indicators, the analysis incorporates satellite-derived measures of economic activity, urbanization, and energy potential to capture spatially observable dimensions of regional development. The results reveal pronounced spatial clustering of regional economic inequality, indicating that disparities are structured by localized spatial interactions. Economic development and spatially distributed urbanization are closely associated with inequality patterns, while the dispersion of economic activity appears to be linked to more balanced regional outcomes. In contrast, natural resource potential alone does not systematically explain spatial inequality, highlighting the importance of complementary institutional and spatial factors. This study contributes to the regional economics literature by demonstrating the value of integrating remote sensing-based indicators into spatial inequality analysis. The findings underscore the need for spatially explicit, place-based development strategies to address persistent regional disparities in peripheral regions of developing economies.

Economies doi: 10.3390/economies14040108

Authors: Artikov Beruniy Yuldoshboy Sobirov Jurabek Kuralbaev Samariddin Makhmudov Ziyat Kurbanov Feruz Kurbanov Zebiniso Navruz-Zoda

This study investigates the moderating role of government effectiveness in the relationship between urbanization, renewable energy adoption, and environmental efficiency in South Asia over the period 1996–2023. Using a dynamic panel life-cycle framework and advanced long-run estimators (FMOLS, DOLS, CCR) complemented by robust corrections for cross-sectional dependence and heteroskedasticity, the analysis reveals that economic growth and trade expansion increase environmental pressures, while renewable energy deployment, industrial modernization, and effective governance significantly reduce CO2 emissions. Notably, the interaction between renewable energy and government effectiveness demonstrates that institutional quality amplifies the mitigation impact of clean energy policies. These findings highlight that environmental outcomes are structurally and institutionally conditioned, emphasizing the importance of governance-contingent strategies for achieving sustainable urbanization and low-carbon development. The study contributes to the literature by integrating governance as a moderating mechanism in the urbanization–environment nexus and providing policy-relevant evidence for sustainability interventions in the region.

Economies doi: 10.3390/economies14040107

Authors: Talal H. Alsabhan

The inflation rate has shown an upward trend globally, specifically after COVID-19, and the economies of the Gulf Cooperation Council (GCC) are not an exception. A heightened inflation in the modern globalized world is indeed undesirable due to its enormous adverse consequences on all sectors of the economy. However, the true determinants of the inflation rate, particularly in the case of GCC economies, are not well-explored. Accordingly, this research paper attempts to see whether the inflation rate in GCC economies is driven by internal factors or global factors. This paper focuses on data for the period 1998 to 2023 and applies the PMG-ARDL methodology for the estimation. The results confirmed that money supply, oil prices, GDP, and global supply chain pressure are the key inflationary drivers in the long run. In contrast, trade openness has reduced the inflation rate in the long run, which is consistent with the prediction of Romer’s hypothesis. In the short run, we found that real GDP and trade openness are the main driving forces behind the heightened inflation rate. Furthermore, the causality findings indicated several unidirectional and bidirectional relationships among the variables under consideration. Our results are robust to alternative econometric estimators and hence offer valuable policy implications for the consideration of policymakers.

Economies doi: 10.3390/economies14040106

Authors: Elena Rusu Cigu

This paper explores the relationship between fiscal decentralization, green finance, and the digital economy in driving sustainable development, using a balanced cross-country panel dataset spanning 2014–2022, for 29 European countries. Employing dynamic panel estimation techniques, including system generalized method of moments (GMM), the research investigates how fiscal decentralization, green finance, and the digital economy (each of them individually and through interaction mechanisms), dynamically shape sustainable development performance in the presence of endogeneity and temporal persistence. The findings reveal strong inertia in sustainable development, which depends on its previous level. Fiscal decentralization has complex effects: revenue autonomy supports sustainability, whereas expenditure autonomy may undermine it, suggesting differences in how resources are used efficiently at the local versus central levels. Digitalization acts as a catalyst, boosting the effectiveness of environmental taxes and enhancing local spending outcomes. However, if fiscal administrations are not digitally integrated, digitalization may weaken the benefits of decentralized revenues. This study advances the literature by integrating fiscal, financial, and digital views, providing new insights into policy coordination.

Economies doi: 10.3390/economies14040105

Authors: Sarah El-Khishin Arwa Mohamed

This paper examines the impact of public debt servicing on private investment in Egypt within the debt overhang hypothesis. While existing research largely focuses on the debt–growth relationship, limited attention has been given to how debt servicing burdens affect private capital formation. Using annual data from 1990 to 2023, the study employs an Autoregressive Distributed Lag (ARDL) model to estimate short-run and long-run dynamics between private sector gross fixed capital formation and key mac-roeconomic variables. Results provide statistically significant evidence of a long-run debt overhang effect, whereby debt servicing exerts a persistent negative impact on private investment. Short-run effects appear temporarily expansionary but dissipate as servicing pressures accumulate. The analysis focuses on Egypt-where debt servicing pressures have repeatedly intensified in response to external shocks and exchange rate adjustments-but offers broader implications for emerging market and developing economies. The paper contributes to the literature by identifying repayment capacity as the key transmission channel through which public debt affects private investment. In contexts characterized by liquidity constraints, external vulnerabilities, and refinancing risks, debt servicing burdens-rather than debt levels alone-constitute the binding con-straint on private capital formation. Accordingly, the findings emphasize the im-portance of assessing debt sustainability through servicing obligations and repayment pressures.

Economies doi: 10.3390/economies14040104

Authors: Apurv Maru Jieying Bi Jianying Wang Fengying Nie

In the context of rural sustainability and poverty alleviation within the developing world, a key dilemma facing the international community is to identify suitable strategies and mechanisms to bring multiple stakeholders together to work in efficient and sustainable ways. This paper focuses on the Public–Private–Producer Partnership (4P), a model that involves cooperation between government agencies, business firms, and small-scale producers to foster mutual trust and enhance collaboration through infrastructure development and capacity building in the agricultural value chain. Drawing on evidence from China, Indonesia, Rwanda, Ghana, and Nigeria, this study examines the impact of 4P on crop productivity, agricultural infrastructure, market access, stakeholder empowerment, employment, the land tenure system, and household income. This paper combines value chain analysis, Theory of Change mapping, and both qualitative and quantitative evaluation techniques to assess how the 4P model functions in different institutional and ecological contexts. While the model promotes inclusive growth, it also faces challenges such as price volatility, insufficient long-term sustainability, and limited integration of smallholder farmers into formal value chains. The paper discusses policy implications for improving the 4P model’s effectiveness in poverty alleviation and local economic development, highlighting the importance of better governance structures, financial mechanisms, and market stability. This paper sheds new light on inclusive, justified, and sustainable collaboration mechanisms for participatory agencies and individuals.

Economies doi: 10.3390/economies14040103

Authors: Lucky Musikavanhu Gladys Gamariel Ireen Choga

The volatility of oil prices has a considerable impact on the economies of oil-exporting countries, making it critical to understand how price variations affect labour markets and unemployment. This study investigates the distinct role of labour market institutions in moderating the effects of oil price volatility on unemployment. Using the Cross-Sectionally Augmented Autoregressive Distributed Lag Model (CS-ARDL) on a panel dataset of nine African oil-exporting countries from 1994 to 2024, the study establishes a strong negative link between oil price changes and unemployment. Furthermore, the results show that real GDP growth leads to a reduction in unemployment in the long run, while the labour market institutional index has a negative impact on unemployment. Interacting the oil price with the labour market institutional index causes a further reduction in unemployment. These results suggest that good labour market institutions and macroeconomic stability are essential for reducing unemployment. While increases in oil prices directly stimulate a reduction in unemployment in African oil-exporting countries, this impact is reinforced by the presence of good labour market institutions in an economy. Therefore, the results suggest that countries with strong labour market institutions are more resilient in reducing the negative impact of oil price volatility on employment. As such, policymakers must prioritise labour market institutional reforms to enhance countries’ capacity to absorb oil price shocks and reduce unemployment during periods of oil prosperity and shield against employment declines when oil prices drop. Furthermore, the creation of oil stabilisation funds in these countries may serve a similar purpose. Contribution/originality: Against a background of inconclusive empirical evidence in the literature and a dearth of research on African countries, this study investigates the role of labour market institutions (LMIs) in the oil price–unemployment nexus in African oil-exporting countries. While highly dependent on oil revenue, these countries record persistent structural unemployment. Therefore, the study provides critical evidence to guide the formulation of policies necessary to deal with external shocks and facilitate structural shifts required for employment growth. Existing studies consider general institutional variables such as democratic accountability and the rule of law and do not assess the effect of labour market institutions. The current study fills in this gap by assessing the distinct role of labour market institutions that are specifically designed to regulate only work-related activities, such as quality of labour regulations, adequacy of social protection and unemployment benefits. Furthermore, this study employed the cross-sectionally augmented autoregressive distributed lag (CS-ARDL) for econometric estimations. Compared to previous studies, this is a more appropriate method that accounts for unobserved common factors such as oil price shocks affecting all oil-exporting countries simultaneously.

Economies doi: 10.3390/economies14030102

Authors: Gelmar García-Vidal Laritza Guzmán-Vilar Alexander Sánchez-Rodríguez Rodobaldo Martínez-Vivar Geisel García-Vidal Reyner Pérez-Campdesuñer

This study examines whether size-contingent employment regulations are associated with distortions in firm size distribution and whether such patterns are more consistent with productivity-based selection or with broader constraints on firm scaling. Using 2024 census data covering 86,758 formal firms in Ecuador, we combine bunching analysis, regression discontinuity design (RDD), and logistic regression to analyze firm responses at the 10- and 50-employee thresholds. We document significant bunching below the 50-employee threshold, consistent with an economically meaningful implicit regulatory tax on firm scaling. However, RDD estimates reveal no productivity discontinuity at the cutoff, indicating that the observed threshold effects are more consistent with broad-based scaling constraints than with selective filtering of low-productivity firms. Sectoral analyses show a consistent pattern of bunching across technologically diverse industries, supporting an institutional rather than technological interpretation. Conditional on threshold proximity, firm crossing is more strongly associated with sales growth than with productivity advantages. By distinguishing between compositional avoidance and local crossing, the study sheds new light on the puzzle of absent productivity selection. These findings provide the first rigorous evidence of regulatory threshold effects in Ecuador and show how size-based regulations may distort firm scaling and contribute to allocative inefficiencies.

Economies doi: 10.3390/economies14030101

Authors: Andrés Vilca Mamani Erika Beatriz García Castro Eusebio Benique Olivera Luzbeth Lipa Tudela Ernesto Calancho Mamani

This study evaluates the incidence of food and non-food social programs in function of income inequality in households in Peru during 2022–2024 in a context of persistent distributive gaps, despite social interventions aimed at promoting equity. Data from the National Household Survey (ENAHO) were used, with 93,148 observations corresponding to beneficiary and non-beneficiary households, and Recentered Influence Function (RIF) regressions were estimated to decompose the marginal effect of both types of programs on the Gini and Atkinson indices (ε = 0.5; 1.0 and 1.5). Food programs reduced inequality by 2.14% according to the RIF of the Gini and by −1.23%, −2.84% and −4.82% according to the RIF of the Atkinson. Non-food programs generated a greater reduction in the RIF of the Gini (−4.06%) and decreases of −2.52%, −3.51% and −3.06% in the Atkinson. Both types of programs positively influenced the decrease in inequality, highlighting the importance of incorporating structural determinants and household characteristics in redistributive policies. Social programs have positive redistributive effects, although insufficient in the face of structural and territorial inequalities. Strengthening their targeting and territorial articulation is recommended, especially in Andean and Amazon regions.

Economies doi: 10.3390/economies14030100

Authors: Erika Kovalova Pavol Durana Katarina Zvarikova Ivana Trulikova

Financial literacy represents a fundamental competence in contemporary knowledge-based economies, particularly in the context of increasingly complex corporate financing instruments. Insufficient financial literacy may lead to suboptimal debt decisions, inefficient capital structures, and heightened financial vulnerability of firms. The aim of this paper is to assess the level of financial literacy of university students in the field of corporate debt financing and to identify key determinants influencing the correctness of their responses. The empirical analysis is based on a quantitative questionnaire survey conducted among university students in the Slovak Republic (n = 403) using a convenience sampling approach. The questionnaire included 16 knowledge-based items focused on debt financing instruments, interest mechanisms, leasing, bonds, and alternative sources of financing. Data were analysed using descriptive statistics and inferential methods, primarily Pearson’s χ2 test of independence and Cramer’s V. The results reveal considerable variability in students’ performance across thematic areas. Higher success rates were observed for basic concepts of debt financing and traditional bank products, while lower performance was recorded for analytically demanding tasks, particularly those related to interest rate comparisons, capital market instruments, and alternative financing forms. Field of study emerged as the most significant determinant of financial literacy, followed by the level of study, whereas gender and region showed only marginal effects. The findings highlight the need to strengthen application-oriented financial education in higher education, with a stronger focus on practical aspects of corporate debt financing.

Economies doi: 10.3390/economies14030099

Authors: Manh Hung Nguyen Thi Mai Thanh Tran Sy An Pham

Amidst the polycrisis of 2018–2024, Asia-Pacific trade flows exhibited a structural resilience that contrasts with traditional theoretical predictions of severe trade contraction under high uncertainty. This study investigates these resilience dynamics using a structural gravity model estimated via the Poisson Pseudo Maximum Likelihood (PPML) approach. The analysis utilizes a balanced panel of 14 key regional economies (N = 4914), explicitly disaggregated into geographic (ASEAN-6 vs. non-ASEAN) and global value chain (high vs. low GVC intensity) subgroups to capture heterogeneous responses. The empirical results confirm that economic policy uncertainty (EPU) acts as a significant trade friction (β = −3.371), consistent with the wait-to-invest mechanism of real options theory. However, this effect is heterogeneous and significantly mitigated by institutional frameworks. We identify a robust institutional shield effect, where participation in trade agreements effectively neutralizes the adverse transmission of policy shocks (interaction coefficient = 3.396). Furthermore, this study uncovers a structural break during periods of extreme geopolitical conflict, characterized by a convex U-shaped relationship between uncertainty and trade. This pattern provides macro-level evidence of a behavioral shift in regional supply chains from a just-in-time cost-efficiency optimization model to a just-in-case security maximization paradigm, consistent with precautionary inventory accumulation. These findings underscore the critical role of modern trade pacts as institutional credibility anchors and the necessity of adaptive strategies in navigating heightened macroeconomic volatility.

Economies doi: 10.3390/economies14030098

Authors: Blanca Estela Garza Acevedo Luis Quintana-Romero Nam Kwon Mun

The Cultural and Creative Industries (CCIs) are dynamic contributors to the global economy but face inherent vulnerabilities due to their structure of small enterprises and project-based nature. This study quantifies the economic resilience of CCIs in Mexico across multiple economic cycles from 1994 to 2023, aiming to fill a gap in quantitative evidence regarding sectoral performance during shocks. Using quarterly Gross Domestic Product (GDP) data, the research applies a counterfactual analytical framework based on resistance and recovery indices. The methodology assesses how specific subsectors—arts and entertainment, research and development (R&D), and services—deviate from national growth patterns during recessions and subsequent expansions. Empirical results indicate that while CCIs generally exhibited weak resistance during the 1994 and 2000 crises, they demonstrated robust recovery capacities. Notably, the 2008 crisis saw resilient performance in the services sector, and the COVID-19 pandemic induced exceptional recovery indices (exceeding 2.0) in arts and services, likely facilitated by rapid digitalization. The study concludes that CCI resilience is contingent on the nature of the crisis. Future sustainability requires a shift from emergency survival to “ecological resilience,” supported by public policies that address financial precariousness and foster digital adaptation.

Economies doi: 10.3390/economies14030097

Authors: Yongqing Zhu Fengtong Yao

Total factor productivity (TFP) is crucial for evaluating technological innovation, yet its accurate measurement remains challenging due to diverse methodologies. Notably, the selection of proxy variables in control function approach (CFA) significantly influences TFP estimation, yet existing studies have failed to clarify the criteria for proxy variable selection, particularly at meso and macro levels. This study employs a comprehensive methodological framework integrating significance, robustness, and comparative analyses to assess TFP estimation methods, addressing prevalent misconceptions. We utilize data sourced from 30 Chinese provinces across three major industries over the period 1998–2022, and conduct TFP calculations employing theoretically comparable methods. Our findings reveal significant discrepancies among methods, emphasizing the impact of proxy variable selection on TFP outcomes. This study finds that while CFA shows comparable performance to traditional production function approach (PFA) in terms of goodness-of-fit and significance (it does not verify the first level of Hypothesis 1 set forth in this study), it excels in reducing TFP estimation volatility (it verifies the second level of Hypothesis 1 set forth in this study). Crucially, proxy variable selection significantly impacts TFP results. We provide empirical norms for proxy variable selection at macro and meso levels, although Hypothesis 2 was not fully validated, offering a standardized framework to enhance TFP measurement accuracy and robustness: energy input is superior for lowly heterogeneous subjects, whereas intermediate input is preferable for those with high heterogeneity, offering valuable implications for policymakers and researchers.

Economies doi: 10.3390/economies14030096

Authors: Fabio Anobile Alberto Costantiello Carlo Drago Massimo Arnone Angelo Leogrande

This paper examines the connection between Environmental, Social, and Governance (ESG) factors and the risk of geopolitics, as defined by the Geopolitical Risk (GPR) index. The concept of geopolitical risk is conventionally defined as the direct result of political incidents, war, and international tensions. The current study argues that the concept should be understood in a more structural and sustainable manner, relating to the underlying forces driving geopolitical risk. The main research question is whether and how the three pillars of ESG factors contribute to explaining and understanding cross-country and over-time variations in geopolitical risk. In an effort to avoid information loss associated with the ESG index’s aggregate nature, the three factors are considered separately and the three pillars are analyzed individually. The empirical context is a balanced cross-country panel dataset including 42 countries over the 2000–2023 time period. Data for the three factors are obtained from the World Bank dataset to standardize and compare data across countries and over time. The GPR index measures the level of geopolitical risk and is defined by Dario Caldara and Matteo Iacoviello. The GPR index captures the level of geopolitical tensions by analyzing media signals. The combination of the three sources enables direct connections and correlations among the three factors and the internationally recognized GPR index. The paper uses an integrated methodological approach that combines results from three distinct methods. The first method uses panel data analysis to estimate average marginal effects while controlling for unobserved heterogeneity. The second method uses clustering to identify structural patterns and divide countries into groups based on their unique characteristics and risk profiles. The third method uses machine learning regressions and nonparametric analysis to capture the complex relationships and interactions in the data. The three-step method is used for each pillar to ensure consistency and comparability. The results suggest that the three factors contribute to the GPR index in a unique manner. The environment and energy structure contribute to the GPR index as a risk multiplier; the social factor relates to exposure to instability; and the governance factor is a central stabilizing factor. The paper makes a unique contribution to the literature by defining the three factors and their relationship to the GPR index in a clear, sustainable manner.

Economies doi: 10.3390/economies14030095

Authors: Ionela Gavrila-Paven

The transformation of trade structures represents a core dimension of economic integration in Central and Eastern Europe, particularly following EU accession and deeper participation in global value chains. Romania and Poland, despite similar institutional frameworks, have exhibited distinct trade trajectories in terms of specialisation patterns, intra–industry trade intensity and external balance. Understanding these differences is essential for assessing the quality of integration, competitiveness and structural upgrading in emerging European economies. Existing empirical studies often focus on single indicators or shorter time horizons, leaving room for a comprehensive, long–run comparative assessment based on multiple trade dimensions. The purpose of this article is to compare the evolution of trade specialisation, intra–industry trade and trade balance in Romania and Poland over the period 2002–2024. The study aims to identify similarities and divergences in their trade structures and to evaluate whether trade expansion has been accompanied by qualitative improvements and external rebalancing. By adopting a comparative perspective, the article seeks to contribute to the literature on trade integration and structural transformation in Central and Eastern Europe. The analysis is based on annual sectoral data on imports and exports for Romania and Poland covering the period 2002–2024. Three complementary indicators are employed: a symmetric Balassa–type revealed comparative advantage index (RSCA), the Grubel–Lloyd intra–industry trade index, and an export–import coverage ratio used as a proxy for sectoral trade balance. Descriptive analysis is complemented by linear trend estimation and structural break tests in order to capture long–run dynamics and identify major shifts associated with EU accession and post–crisis adjustments. The results show that while both countries experienced substantial trade expansion, Poland achieved a significantly stronger qualitative outcome, characterised by higher intra–industry trade intensity and convergence towards aggregate trade balance by 2024. Romania, although recording improvements in trade composition, maintained a persistent trade deficit. The article adds value by providing a long–run, indicator–based comparative framework that integrates specialisation, intra–industry trade and external balance into a single empirical analysis.

Economies doi: 10.3390/economies14030094

Authors: Fancheng Meng

The transformation of the labor market driven by digital technology has profoundly affected workers’ income. Based on data from the China Family Panel Studies (CFPS) 2014–2022 and the China Labor-force Dynamic Survey (CLDS) 2012–2018, this paper systematically examines the causal effects of standard employment, traditional non-standard employment (labor dispatch), and new non-standard employment (non-contract employment) on income within a unified framework. This study adopts a progressive identification strategy combining the two-way fixed-effects model, individual fixed-effects model, and event study methodology. The findings are as follows: First, new non-standard employment exhibits a significant “income penalty” effect, with its wage level being 14–15% lower than that of standard employment. This effect remains robust after controlling for individual heterogeneity. Second, dynamic analysis shows that transitioning from standard employment to new non-standard employment leads to sustained income loss, with a decline of nearly 10.8% after four years. Third, mechanism testing reveals that workers increase part-time work to compensate for income loss, but job satisfaction significantly declines, leading to a dual dilemma of “exchanging time for income” and “welfare discount.” Fourth, heterogeneity analysis shows that less educated and rural workers suffer greater shocks. The study concludes that new non-standard employment has inherent income suppression characteristics, and its effects are persistent and heterogeneous. It calls for the improvement of a labor rights protection system that adapts to new forms of employment, as well as the implementation of targeted support policies for vulnerable groups, in order to build a more equitable and secure labor market.

Economies doi: 10.3390/economies14030093

Authors: Radoslav Ivančík Jiří Dušek

This article analyses the rise of economic security as a new organising principle of European Union economic governance and examines the extent to which this concept is transforming the traditional model of European industrial and market policy. In the context of escalating geopolitical rivalry, the disruption of global supply chains, technological competition, and energy uncertainty, the EU is gradually shifting away from a purely regulatory approach based on market liberalisation and competition enforcement towards a more active and strategically oriented model of intervention. The study employs a qualitative political-economic research design, combining policy and document analysis with case studies of strategic sectors, including advanced technologies, critical raw materials, energy, and trade-investment instruments. The findings demonstrate that economic security is operationalised through coordinated investment, the support of domestic capacities, and the selective protection of strategic industries. This contributes to the mitigation of systemic risks, the strengthening of technological sovereignty, and the enhancement of supply chain resilience. However, these policies simultaneously create tensions between efficiency, fiscal sustainability, and the integrity of the Single Market. The article contributes to the political economy literature by conceptualising economic security as a hybrid model that merges market integration with strategic public coordination and evaluates its implications for the Union’s long-term competitiveness and economic development.