A nexus between intra-ASEAN outward FDI, intra-ASEAN exports and economic growth of ASEAN-10: evidence using panel causality analysis
Asia-Pacific Journal of Business Administration
ISSN: 1757-4323
Article publication date: 17 May 2022
Issue publication date: 2 August 2023
Abstract
Purpose
The Association of Southeast Asian Nations (ASEAN) has evolved into ASEAN Economic Community (AEC), which aims to pursue a single market and production base to transform ASEAN into a dynamic, competitive and global region. ASEAN is inherently heterogeneous that potentially could promote further economic integration, fundamentally, through the interactions between intra-regional outward foreign direct investment (OFDI), export trade and economic growth. Hence, this paper attempts to explore the causal relationship between intra-ASEAN OFDI, intra-ASEAN exports and economic growth of ASEAN-10 countries.
Design/methodology/approach
This paper attempts to explore the causal relationship between intra-ASEAN OFDI, intra-ASEAN exports and economic growth of ASEAN-10 countries, using regional panel data based on Dumitrescu and Hurlin (2012) non-causality analysis, which allows us to take into account of the heterogeneity in terms of causal relationships.
Findings
The empirical study shows bidirectional causality between intra-ASEAN export and intra-ASEAN OFDI, a bidirectional causality between intra-ASEAN export trade and intra-ASEAN economic growth and a unidirectional causality running from the real GDP of ASEAN-10 countries to intra-ASEAN OFDI.
Research limitations/implications
The findings have implications for the extent of intra-ASEAN production fragmentation, policy formulations for furthering intra-regional OFDI, and trade to achieve the ASEAN integration agenda.
Originality/value
The main contribution of the current study is to use the panel causality analysis for an emerging dynamic region, specifically, the AEC. As far as we know, this is the first study ascertaining whether there is a causality relationship between intra-ASEAN OFDI, intra-ASEAN export trade and economic growth of ASEAN-10, which is a longstanding objective of ASEAN integration agenda.
Keywords
Acknowledgements
The authors would like to acknowledge the FRGS research grant from the Ministry of Education, Malaysia, FRGS/1/2020/SS0/USM/02/25.
Citation
Wong, K.N., Tan, B.W. and Goh, S.K. (2023), "A nexus between intra-ASEAN outward FDI, intra-ASEAN exports and economic growth of ASEAN-10: evidence using panel causality analysis", Asia-Pacific Journal of Business Administration, Vol. 15 No. 4, pp. 489-508. https://doi.org/10.1108/APJBA-05-2021-0218
Publisher
:Emerald Publishing Limited
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