Introduction
The world’s geopolitical landscape has never been more dynamic. Environmental pressures and disruptions to the global economy have driven researchers to re-examine the links between globalisation and emerging threats. The current special issue touches on some issues related to the challenges in front of globalisation, economic connectivity and economic development for human prosperity. We ask the question what does a post-COVID-19 world look like in terms of trade and investment flows? What is the future of economic connectivity and what are policies that would lead to improvements? We inquire about putting in perspective the wide range of challenges economies are facing in the year 2022: disruptions and uncertainty in global trade and investment flows; environmental implications of international economic activity; accelerating automation of production that leads to falling labour shares and increasing income inequality in the context of an interconnected world. The issue contains five articles and one book review by international scholars.
The first article by Canh Nguyen and Su Thanh (Canh & Thanh, 2022) investigates the dynamics of export diversification, economic complexity and economic growth cycles. The authors apply several advanced econometric techniques to estimate the relationships among the variables for a global sample of countries. They find a Granger bidirectional causality between economic complexity and export diversification, and a unidirectional Granger causality exists from economic complexity to economic growth cycles. A three-stage least squares method demonstrates that economic complexity and export diversification significantly impact each other, and the dynamics of economic complexity and export diversification reduce economic fluctuations. The authors also find that the negative impact of economic complexity on economic growth cycles is statistically significant only for high-income economies.
The second article by Nidhi Bagaria (Bagaria, 2022) pays attention to the increasing trade in intermediate goods dues to the wider spread of global value chains (GVCs). With China emerging as one of the leading countries in the global GVC network, there is a heavier reliance on Chinese intermediate goods for the manufacturing sector. The outbreak of COVID-19 and the subsequent lockdowns in many countries, including China, have disrupted the supply of GVCs and have led to a search for alternative markets for intermediate goods. The study by Nidhi Bagaria explores how India can substitute for China as an alternative avenue for intermediate goods in the US-led GVC networks. The analysis reveals that in the ‘textiles, wearing apparel, leather and related products’ and ‘chemicals and non-metallic mineral products’ industries, India could be a replacement for China for the US-led GVC networks.
The third article by Aisha Tauqir, Muhammad Tariq Majeed and Sadaf Kashif (Tauqir et al., 2022) discusses the role of foreign direct investment (FDI) in volatility in output growth. More specifically, the article examines the role of the instability of FDI inflows on output growth volatility using a panel data set of 141 world countries. Findings of the study suggest that FDI acts as a volatility-reducing factor, whereas uncertainty of FDI inflows increases output volatility. On that ground, the authors recommend policies that ensure the stability and predictability of FDI inflows.
The fourth article by Jaivir Singh, Vatsala Shreeti and Parnil Urdhwareshe (Singh et al., 2022) ocuses on bilateral investment treaties and their impact on the FDI inflows to India. India has a unique experience with recently denouncing its investment treaties as a result of some adverse investor–state dispute settlements and negotiating a new model treaty that privileges state rights over investor rights. Therefore, the article studies the impact of bilateral investment treaties on FDI inflows into India before the denunciation and seeks to anticipate the consequences of the changing system. The results show that while the individual signing of bilateral investment treaties does not influence the inflow of FDI, the effect of the cumulative bilateral investment treaties signed is statistically significant, suggesting that the spillover effect of signing a series of bilateral investment treaties is important for overall protection to investors. The author concludes that the importance of participation in a global system governed by international investment agreements cannot be underestimated, and the recent policy changes should be viewed with caution.
The fifth article by Nadia Doytch (Doytch, 2022) explores the responsiveness of sector-level FDI inflows and outflows to economic accelerations and decelerations in the wake of the COVID-19 pandemic economic crisis and anticipated prolonged economic recession. The results suggest that financial services FDI and both transport services FDI inflows and outflows are countercyclical. At the same time, manufacturing FDI outflows are procyclical. The results suggest that the most vulnerable sectoral FDI flow to a potentially prolonged recession resulting from the COVID-19 pandemic crisis will be manufacturing FDI.
The sixth article is a book review by Debashis Chakraborty on the ‘Role of IT-ITES in Economic Development of Asia Issues of Growth, Sustainability and Governance’ by Soumyen Sikdar, Ramesh Chandra Das and Rajib Bhattacharyya (Chakraborty, 2022). The book review comments on the role of information technology (IT) in trade in services (information technology enables services [ITES]), emphasising the role of cross-border supply, consumption abroad, commercial presence, including investment abroad, and movement of workers. The book review summarises the structure of the book with an emphasis on the importance of IT/ITES sectors in employment creation and sustainable growth. It highlights the significance of the Asian IT/ITES and, specifically, its usage in the sectors of healthcare, education and finance. The book review also summarises the possible questions for future research. For example, which sectors should governments promote to foster economic growth: IT, finance or another sector, or the question about a possible future e-Governance reform.
