Role of trade openness in moderating the effects of broadband penetration on technological catch-up: the case of emerging market economies

Purpose This study aims to explore how trade openness moderates the effects of fixed and mobile broadband penetration on technological catch-up of emerging market economies. Design/methodology/approach The study used data from three sources: Penn World Table, World Bank World Development Indicators and International Telecommunication Union databases for the period between 2000 and 2019. The empirical evidence is based on feasible generalized least squares, panel-corrected standard errors and bias-corrected dynamic regression. Findings The main findings are as follows. First, both fixed and mobile broadband penetrations play significant roles in enhancing the process of technological catch-up among the countries. They speed up the process of technological transfer and improve the absorption capacity of the countries to transfer, decode and appropriately apply foreign technology in their countries. Second, trade openness is found to significantly moderate the effect of fixed broadband penetration, but it does not moderate the effect of the mobile one. Research limitations/implications The major research limitation is that findings are based on 15 emerging economies, which can limit generalizability. Total factor productivity growth measures efficiency improvements but no other aspects of technological progress, such as innovation in products or processes. Data discrepancy between fixed and mobile broadband limits results’ comparability between the broadband types. Practical implications The implications of the findings relate to the fact that governments should invest in broadband infrastructure to ensure fast, affordable and competitive internet access across all sectors and regions. Trade liberalization should be prioritized to enhance the benefits of globalization and support technological catch-up. Originality/value This study adds to the literature by providing fresh insight into the role of openness in moderating the effect of broadband penetration on technological catch-up, using panel data for emerging countries drawn from Asia, Europe, Latin America and Africa.