Abstract
Global economy has currently integrated and has been interdependent between the developing and developed countries. The improved integration and interdependence level is expected to improve citizens’ welfare. This study aims at testing the correlation between fiscal and trade policies and welfare in ASEAN countries + 3 countries (Singapore, Malaysia, Indonesia, Thailand, Philippines, Brunei Darussalam, Cambodia, Vietnam, Myanmar, Laos + Japan, China, and Korea). It used the secondary data from World Bank, Asian Development Bank (ADB) and Economist Intelligence Unit from 1990 to 2015. The analysis uses the POLS-ECM (Panel Ordinary Least Square-Eagle Granger Error Correction Model). The results of analysis show that economic growth, infrastructure capital expenditure, economic openness, and tax ratio had a significant effect on welfare ASEAN + 3 countries
Highlights
The increased bilateral and multilateral cooperation aims at supporting the improvement of economic performance the countries
This study aims at examining the determinant factors to welfare state in ASEAN+3 countries, especially consideration that economic liberalization are different in ASEAN countries because they are different in level of openness and economic performance such as level of income per capita, and economic growth
(baseline), SYRi,60: Average of population of junior high school in 1960, TTI : term of trade index, POP: sum of population, INV/Gross Domestic Product (GDP): ratio of gross human capital/GDP, LIB: dummy variable. It is based on Falvey et al (2012) model to analyze of relationship between economic liberalization, fiscal conditions, and tax ratio toward welfare in ASEAN+3 countries
Summary
The increased bilateral and multilateral cooperation aims at supporting the improvement of economic performance the countries. The increased cooperation is a necessity integration and interdependence of global economy is increasing. The increased integration and interdependence affects any country either positively or negatively. This condition encourages global economic conditions to be highly dynamic, impacting the dynamic economy of countries and regional economy, especially when the dynamics of economy comes from developed countries such as the USA, Japan, China and the European Union (Boubaker et al 2014). The improvement of community’s welfare is the national development goal to be achieved by every country including ASEAN countries. This requires the supports of all economic actors from both domestic and foreign countries. This requires the supports of all economic actors from both domestic and foreign countries. Dima et al (2014) suggest that mobilization of factors of production between countries is important in improving regional economic welfare, provided that there is no asymmetric information
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