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Will Southeast Asia be the next global manufacturing hub? A multiway cointegration, causality, and dynamic connectedness analyses

Author

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  • Wang, Haibo
  • Sua, Lutfu S.
  • Huang, Jun
  • Ortiz, Jaime
  • Alidaee, Bahram

Abstract

We propose a novel framework to examine relationships among drivers of economic growth in Southeast Asia, a region poised to become a significant manufacturing destination. However, unbalanced economic growth among countries poses risks to multinational companies considering offshoring decisions. Our two-stage framework uses multi-way cointegration analysis and a vector error correction model (VECM) to investigate critical drivers of economic growth. We apply a QVAR model to evaluate dynamic connectedness and spillover effects of offshoring decisions. Using World Bank data, our results show that Southeast Asian countries are interconnected through complex relationships featuring multi-way cointegration and dynamic connectedness, informing evidence-based policy.

Suggested Citation

  • Wang, Haibo & Sua, Lutfu S. & Huang, Jun & Ortiz, Jaime & Alidaee, Bahram, 2024. "Will Southeast Asia be the next global manufacturing hub? A multiway cointegration, causality, and dynamic connectedness analyses," Emerging Markets Review, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:ememar:v:63:y:2024:i:c:s1566014124001122
    DOI: 10.1016/j.ememar.2024.101217
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    More about this item

    Keywords

    Cointegration; Vector error correction model (VECM); Quantile vector autoregressive (QVAR); Spillover effects; Time-series data; Offshoring;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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