The interaction between smart technology and financial development on economic growth in developing countries

Abstract

In recent decades, the relationship between smart technology and economic growth of countries has increased greatly, and countries with higher technology and more knowledge have been able to increase their economic growth by increasing financial development. Therefore, this study will examine the mutual effects of smart technology and financial development on the economic growth of 15 developing countries in the OPEC and Middle East. The data of this study is in the form of a panel and for the years 2000 to 2021. In this study, the modified least squares method and dynamic least squares were used to estimate the model. The results of the research show that in the long run, inflation has a negative effect on economic growth, but smart technology and financial development have a positive and significant effect on economic growth. This is while trade has no significant effect on the economic growth of the selected countries. Using the Granger causality relationship, it was determined that in the short run, smart technology and financial development have an effect on economic growth, and the relationship between smart technology and growth is two-way, while the relationship between growth and financial development is a one-way relationship. Also, in the long run, smart technology and financial development have an effect on economic growth. Therefore, governments investing in technology will lead to greater financial development and ultimately greater economic growth in the short and long term.