The impacts of exports on economic growth: the case of selected Southeast Asia countries

Abstract

The thesis aims to answer the question that how is exports affect on the economic growth in the five selected Southeast Asia countries, including Indonesia, Malaysia, Singapore, Thailand and Vietnam, during the period of 1991-2010 by using the neoclassical growth model established by Romer (1986) and Lucas (1988). In the period of 1991-2010, economic growth of the five Southeast Asia countries were growing very fast in tandem with the strong growth of exports. This is because the economies of the five Southeast Asia countries largely relied on trade activities, especially exports, with developed countries such as USA, Japan, and European countries, etc…. Therefore, determining and examining the impact of exports on economic growth are important to help these countries keep their growth sustainable. In this paper, the augmented Solow Growth Model was adopted to find the impact of exports on growth. Also, the key model employed to run regression is Linear Exports-Growth Model with a panel data of the five Southeast Asia countries. To capture the different impact of exports on growth over the selected countries, fixed effect regression model is chosen to apply in the paper. The main findings of the paper point out that only Malaysia, Singapore and Thailand of which exports have statistically significant positive impacts on economic growth at the levels of significance of 1%, 1% and 10%, respectively. Oppositely, Indonesia and Vietnam showed a negative impact on economic growth, however, these impacts were not statistically significant. In addition, to measure and compare the different impacts of exports on growth over the selected countries, the fixed effect regression model is employed. The results showed that the more developed the economy is, the stronger impact of exports on economic growth is. More specifically, the impact levels of exports on growth at the five selected Southeast Asia countries are ascendingly arranged based on development of the economy as follows: Vietnam (-0.029%), Indonesia (-0.016%), Thailand (0.151%), Malaysia (0.196%) and Singapore (0.495%).