The Granger causality of digital connectivity and trade globalization in the health crisis

Abstract

The widespread adoption of digital technology in the last decade has caused global changes, leading to the belief that technology is altering the global connectivity of economies. This is especially emphasized in light of the global health crisis in 2020. To efficiently monitor this process, it is vital to assess the anticipatory potential of this type of digital connectivity and the growth of globalization in trade. An effective analysis of this issue necessitates looking into the causative relationship between digital technology connections and trade globalization. This is performed by applying the statistical approach of Granger causality to a data set consisting of 35 European countries from 2010 to 2022. A Granger causality study was performed using the lag value estimated based on the Akaike information criterion, which equals 2. The findings suggested that there is a unidirectional causal relationship between active mobile-broadband subscriptions and imports, with the former influencing the latter. However, this causal relationship fails to be valid in the opposite direction. The examination revealed a reciprocal relationship between fixed-telephone subscriptions and exports, as well as a reciprocal relationship between fixed-telephone subscriptions and imports. The results reveal the bidirectional value of the number of fixed telephone subscriptions as a measure of digital connectivity.