General dependencies and causality analysis of road traffic fatalities in OECD countries

Abstract

The road traffic accidents were responsible for material and human loss which was equal to 2.8 to 5% of gross national product (GNP). However, literature does not explore the elasticity coefficients and nexus of road traffic fatalities with foreign direct investment, health expenditures, trade openness, mobile subscriptions, the number of researchers in R&D department, and environmental particulate matter. This study filled this research gap by exploring the nexus between road traffic fatalities, foreign direct investment, health expenditures, trade openness, mobile subscriptions, the number of researchers, and environmental particulate matter in Organization for Economic Cooperation and Development (OECD) countries by using panel data from 1995 to 2015. The panel Autoregressive Distributed Lag (ARDL) bound test was used for the detection of cointegration between the variables after checking the stationarity in selected variables with different panel unit root tests. Panel vector error correction model explored the causality of road traffic fatalities, foreign direct investment, PM2.5 in the environment, and trade openness in the long run. Road traffic fatalities showed short run bi-directional causality with foreign direct investment and health expenditures. The short run bi-directional causality was also observed between trade and foreign direct investment and cellular mobile subscriptions and foreign direct investment. The panel fully modified ordinary least square (FMOLS) and panel dynamic ordinary least square (DOLS) showed the 0.947% reduction in road fatalities for 1% increase in the health expenditures in OECD countries. The significant reduction in road fatalities was also observed due to 1% increase in trade openness and researchers in R&D, which implies the importance of trade and research for road safety. It is required to invest in the health sector for the safety of precious human lives like the hospitals with latest medical equipment and improvement in the emergency services in the country. The research and development activities should be enhanced especially for the health and transportation sectors. The trade of environment-friendly technology should be promoted for the protection of environment.