Determinants of Transportation Sector Growth: A Comparative Analysis among Selected ASEAN Member States

Purpose: This study examines the relationship between GDP per capita, FDI net inflows, fuel prices, and the Gross Value Added of the Transportation, Storage, and Communication sector (GVATSC) of five selected ASEAN member countries which are Philippines, Indonesia, Thailand, Singapore, and Malaysia over the period of 1981 to 2019. Methodology: The secondary data on GDP per capita, FDI net inflows, fuel prices, and GVA of the Transport, Storage, and Communication sector were assessed using Levin-Lin-Chu (LLC, 2002) and Im-Pesaran-Shin (IPS, 2003) unit root tests and Johansen cointegration test to examine the properties of the variables. Panel Least Squares and Ordinary Least Squares were used to analyze the effects of GDP per capita, FDI net inflows, and fuel prices on GVATSC. Finally, Granger Causality test was applied to determine the direction of causality between the variables. Findings: The results of Panel Least Squares and Ordinary Least Squares showed that GDP per capita has a significant and positive impact on GVATSC. FDI net inflows and fuel prices exhibit negative and positive relationships with GVATSC, respectively, but both are statistically insignificant. OLS test results revealed that FDI has a negative but insignificant impact, which is consistent across most countries, except for Singapore and Malaysia, where a significant negative relationship was found. Fuel prices show varying direction of impact across all countries, though the effect is insignificant. Contribution to Theory, Practice and Policy: This study recommends that governments of ASEAN member states refine their investment strategies to better allocate resources toward initiatives that improve public infrastructures and tourism, thereby fostering economic growth and sustainable transportation sector growth.