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Trade Openness and Economic Growth: A Study on Asean-6

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  • My-Linh Thi Nguyen

    (Faculty of Finance and Banking, University of Finance—Marketing (UFM), Ho Chi Minh City 700000, Vietnam)

  • Toan Ngoc Bui

    (Faculty of Finance and Banking, Industrial University of Ho Chi Minh City (IUH), Ho Chi Minh City 700000, Vietnam)

Abstract

This paper focuses on examining the nonlinear impact of trade openness (TO) on economic growth (EG) in the Asean-6 countries (Indonesia, Malaysia, Thailand, Singapore, Philippines, and Vietnam). In order to achieve the set research objectives, the authors estimate the research model through the fixed-effect panel threshold approach. Unlike previous studies, this paper finds that there is a nonlinear impact of TO on EG, whereby TO has two threshold values. Specifically, before the first threshold value, TO plays an important role in boosting EG. However, this impact level decreases gradually when TO exceeds this threshold value. In particular, when exceeding the second threshold value, the impact of TO on EG is still positive but has a relatively low value. The research results show that if TO increases to a high level (beyond the threshold value) without combining with other complementary policies, this does not encourage high-efficiency EG. In addition, this study also shows that EG is positively affected by domestic investment and negatively affected by financial crisis. The findings in this paper are of great importance for the Asean-6 countries as well as researchers.

Suggested Citation

  • My-Linh Thi Nguyen & Toan Ngoc Bui, 2021. "Trade Openness and Economic Growth: A Study on Asean-6," Economies, MDPI, vol. 9(3), pages 1-16, August.
    • Handle: RePEc:gam:jecomi:v:9:y:2021:i:3:p:113-:d:614315
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