Economic growth under common shocks: Digital access, trade openness, and capital formation in 19 OECD Countries

Using a balanced panel of 19 OECD countries over 1996–2023, this study examines conditional associations between real GDP growth and digitalization, trade openness, foreign direct investment (FDI), gross fixed capital formation (GFCF), inflation, and unemployment. Because internet use, trade openness, and inflation enter in first differences, the principal estimation sample contains 513 country-year observations for 1997–2023. A Mundlak correlated-random-effects test rejects the random-effects orthogonality assumption, while year effects are jointly significant; therefore, the principal specification uses country and year fixed effects with country-clustered inference. Driscoll–Kraay standard errors, PCSE, crisis controls, a dynamic fixed-effects model, restricted two-step System GMM, and a fixed-broadband robustness exercise are also reported. In the principal model, the annual change in trade openness is negatively associated with growth, whereas GFCF is positively associated with growth. FDI, internet diffusion, inflation change, and unemployment are not statistically significant at the 5% level. The broadband exercise also yields no robust digitalization coefficient. Results are interpreted as conditional panel associations rather than causal effects, emphasizing the importance of common shocks and estimator choice.