FDI and Trade Connectivity in EU: New Evidence from a Non-Linear Panel Smooth Transition VECM

This study examines the relationship between real gross domestic product (GDP) per capita, trade openness and foreign direct investment (FDI) inflows, for the group of the European Union (EU) countries over the period 1995-2020. Using recently developed panel unit root and cointegration techniques, the empirical results confirm the existence of a long-run relationship among the variables. A structural break in the cointegrating relationship appears in 2009. Taking into account the 2009 regime shift, we estimate a panel smooth transition vector error correction model (PST-VECM) to examine whether real GDP per capita, trade openness, and FDI have non-linear short-term and long-term causal relationships. Our findings demonstrate how crucial it is to consider potential non-linearities when assessing FDI-trade-growth causality nexus and designing macroeconomic policies. Overall, the study's findings suggest that trade is a more effective growth stimulant, than FDI. Policy implications are then explored in the conclusions

CSR and Strategic Communication in Spanish-Language Academia: A Systematic Review

The concept of strategic communication has gained importance in the internal and external management of organisations, especially in relation to Corporate Social Responsibility (CSR). This study aims to analyse how CSR communication strategies are addressed in Spanish-speaking academia, identifying key trends and their impact on corporate reputation and competitiveness. The methodology is based on a documentary review of recent studies on CSR communication in various sectors. The results highlight that sectors with greater environmental or social impact adapt their practices to gain public trust. The conclusions reveal that effective CSR communication enhances reputation, consumer loyalty, and long-term competitiveness. This study contributes by systematising Spanish-language scientific production linking CSR and strategic communication, offering theoretical insights and practical tools. Its novelty lies in identifying trends in Spanish-speaking academia and fostering a critical dialogue on responsible corporate management while emphasising the role of Spanish in CSR knowledge dissemination

The Causal Relationship between Banking, Capital Markets and Economic Growth in the European Union

The current paper investigates the causal relationship between financial development and economic growth in 27 European Union (EU) countries. Granger causality tests are applied, using the cointegration and Vector Error-Correction (VEC) methodology. Through the empirical analysis, we found evidence of the presence of Granger causality between finance and growth, sometimes even bi-directional causality, but the nature of the relationship is far from uniform across EU countries. Therefore, a one-size-fits-all approach of policymakers may not be effective for the financial sector to drive economic growth. The results suggest that there are different interactions between the financial sector and economic expansion, based on country specifics, as the causality is sustained by the banking sub-sector in some cases, especially in the case of countries that were part of the former communist bloc, and it is driven by the capital market in other cases. There are also cases in which both financial sectors Granger cause economic growth mostly in the countries that succeeded to better diversify their sources of funding. These findings highlight the presence of financial structural differences among EU countries, and, at the same time, the importance of tailored policies to support further economic expansion

Impact of Macroeconomic Factors on S&P Europe 350 ESG Index During the Russo-Ukrainian War

The Russo-Ukrainian War, which began on February 24, 2022, has introduced significant economic and geopolitical instability. This study aims to investigate the specific impact of key macroeconomic variables - interest rates, exchange rates, inflation, oil, and gas prices—on the S&P Europe 350 ESG Index (SPEESEP) during this conflict. By analyzing daily data spanning 20 months from April 20, 2021, to November 30, 2022, encompassing both pre-war and post-war periods, we employ the Wavelet Coherence Transformation (WCT) method to examine these relationships. Our findings reveal that exchange rates, oil, and gas prices significantly impact the ESG index, while interest rates and inflation exhibit a moderate influence. These results underscore the importance of understanding macroeconomic fluctuations during geopolitical crises for informed investment decisions. The broader significance of this study lies in its potential to guide investors in navigating the complexities introduced by geopolitical conflicts, thereby aiding in better financial decision-making and risk management. By developing appropriate regulations for the ESG industry, this research can contribute to minimizing risks and maximizing profits in volatile environments. As geopolitical risks are a persistent factor in investing, this study emphasizes the necessity for investors to meticulously evaluate these risks when devising investment strategies.

The Euro and Saving-Investment Imbalances over 25 Years: The Importance of Common Currency and Common Markets

The 1992 Maastricht Treaty, laid the foundations for the current European Union with its single market in goods, services, capital and labour and established the framework for the creation of the single currency. We study countries that differ in the extent to which they share a common currency or common markets in labour, capital or goods through membership of the single market. These differences between countries allow us to judge the importance of membership of each of these institutions. We examine the impact of the euro on the labour, capital and goods markets and ask if membership of the euro is reflected in the parameters of some standard econometric relationships in particular the Feldstein-Horioka and purchasing power parity equations

Investigating the Determinants of Public Debt Sustainability for European Union Countries

This study investigates the determinants of public debt sustainability in the European Union (EU) countries, focusing on the combined effects of the COVID-19 pandemic and the Ukraine conflict. Utilizing the Generalized Method of Moments (GMM) for the 2000-2022 period to address the endogeneity and heterogeneity aspects, the research incorporates various factors, such as military and healthcare expenditures, private debt, and political stability to provide a comprehensive analysis of public debt dynamics. The findings revealed that lagged debt has a significant positive impact on current public debt, indicating its persistence over time. Economic downturns, military spending, and private debt are identified as key drivers of rising public debt, especially during periods of geopolitical tension and economic instability. Additionally, the study highlighted the roles of GDP per capita, inflation, and government expenditure in influencing fiscal stability. The research underscores the importance of adopting long-term fiscal discipline and counter-cyclical measures to manage public debt, particularly during crises. The study offers a comprehensive and original perspective upon the dynamics of EU countries’ public debt and suggests that fiscal policies encouraging investments and supporting political stability contribute to the sustainable management of public debt

Do the Green Bonds Markets React to Political Uncertainty and Financial Stress Alike?

This study investigates the dynamic relationship between political uncertainty (EPU), financial stress, and green bond returns, utilizing the Range-DCC GARCH model and wavelet coherence analysis. The primary objective is to assess how these factors interact during periods of economic and geopolitical turmoil, specifically the 2014-2016 oil crisis and the COVID-19 pandemic. Our findings reveal a positive correlation between political uncertainty and green bond returns during these crisis periods, suggesting that green bonds act as a safe haven or diversification tool when facing heightened uncertainty. The Range-DCC GARCH model confirms that EPU significantly impacts green bond returns in times of crisis, while the wavelet coherence analysis uncovers a time-frequency co-movement between financial stress, political uncertainty, and green bond performance, particularly during major disruptions. These results contribute to the understanding of green bonds' role as a resilient investment asset during times of volatility. From a practical perspective, these findings offer valuable insights for investors and policymakers seeking to enhance risk management and sustainable investment strategies amid growing uncertainties. Future research could build on these insights by incorporating additional dimensions of uncertainty such as climate risk and environmental policy uncertainty to better understand their differentiated impacts on green bond market behavior and resilience

Digital Divide on Financial Development in Asia-Pacific Region: The Role of Contextual Factors

This study delves into the influence of the digital divide on financial development, considering contextual factors, particularly institutional frameworks. The Asia-Pacific region, chosen for its diverse variables across countries, was pivotal in elucidating this relationship. This research reveals that the impact of the digital divide on financial development becomes evident about two years post-implementation by addressing time lag and endogeneity concerns with instrumental variables. Notably, the study highlights how the digital divide affects financial inclusion advancements, with institutional quality moderating the strength of this relationship but not altering its trajectory. Monopoly is recognized as a constraint on financial development, supporting previous research. Policymakers in transitioning economies should heed the delayed effects of digital transformation, emphasizing long-term strategies considering multifaceted impacts on financial development

Exploring the Channels of Financial Inclusion’s Impact on Poverty Reduction in Sub-Saharan Africa

There is no doubt that Sub-Saharan Africa (SSA) is home to many financially excluded persons, and the sub-region accounts for a high proportion of the world’s poor. Despite the co-existence of low level of financial inclusion (FI) and high poverty level in SSA, little attention has been given to empirical linkage between these two phenomena. This research attempts to unravel the channels through which FI (measured by the composite financial inclusion index developed using the Principal Component Analysis) impact poverty reduction in a sample of 25 SSA countries. The system-Generalized Method of Moments (i.e., system-GMM) estimator was employed to analyze data for the 2004-2022 period. The empirical outcomes portray that the FI-poverty reduction relation is non-linear, and it identify income growth, consumption expenditure, agricultural output, and unemployment as the channels through which FI influences poverty reduction in the SSA region. The findings further reveal that an FI value beyond thresholds of 1.44 and 5.25 increases income growth and reduces unemployment, thereby reducing poverty. Additionally, an FI value below thresholds of 2.87 and 1.40 positively impacts consumption expenditure and agricultural output, leading to poverty reduction. The study recommends that the monetary authorities in SSA adopt policies which increase the access to financial services and promote financial literacy to enhance financial inclusion and reduce poverty

The Contribution of Digitalization to FDI Inflows – Private Investment Nexus in Advanced Countries

Foreign direct investment (FDI) is crucial for economic advancement as it brings in physical capital, facilitates technology transfer, and promotes innovation. Concurrently, private investment stands as a fundamental driver of economic growth. The emergence of digital technology offers nations fresh prospects to cut costs, decrease emissions, and move towards a more sustainable, environmentally friendly economy. Does digitalization contribute to FDI inflows – private investment nexus in advanced countries? We provide the answer by applying the two-step system and difference GMM estimators to explore the effects of FDI, digitalization, and their interaction terms on private investment in 37 advanced countries from 2010 to 2023. The findings note that FDI crowds out private investment, but digitalization and interaction terms promote it. Furthermore, labor force increases private investment, while inflation decreases it. These results propose that advanced countries can adopt suitable policy strategies to maximize the benefits of FDI and digitalization for enhancing private investment