Unlocking economic growth in South Asia: how energy shortages, digital trade, and financial development interact

Feng Wang () and Tayyaba Rani ()
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Feng Wang: Xi’an Jiaotong University
Tayyaba Rani: Xi’an Jiaotong University

Economic Change and Restructuring, 2025, vol. 58, issue 5, No 3, 31 pages

Abstract: Abstract South Asian economies have long struggled with energy shortages and economic instability, factors that hinder their path to sustainable growth. While digital trade holds promise as a catalyst for economic expansion, its potential is uncertain due to financial limitations and persistent energy deficits. This study explores the dynamic relationship between digital trade, energy shortages, and economic growth in South Asia, with a focus on how financial development can influence these factors. By employing an advanced analytical approach, the findings reveal a complex, non-linear interaction between trade openness, energy shortages, and economic performance. The results suggest that while trade openness can have a positive impact on growth under certain conditions, energy shortages consistently exert a negative influence. Financial development shows a mixed effect, initially hindering growth but turning favorable as economies reach higher levels of development. Moreover, the interaction between financial development and energy shortages indicates that stronger financial systems can help offset the negative effects of energy scarcity, although this benefit diminishes as economies mature. The study emphasizes the need for stronger financial regulations, greater investment in renewable energy, and enhanced regional cooperation to foster sustainable and inclusive economic growth.

Keywords: Energy shortages; Digital trade; Financial development; South Asian economies; Economic growth (search for similar items in EconPapers)
JEL-codes: B17 F4 N7 O4 P33 Q4 Q56 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10644-025-09914-y

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