The Empirical Investigation on The Relationship of Foreign Trade, Institutions and Economic Performance of The ASEAN Nations

Abstract

This short empirical paper attempts to study on the empirical investigation on the relationship of foreign trade and institutional stocks on economic growth of the ASEAN nations. The panel data which contains ten countries in ASEAN is employed to use in this paper and the econometric estimations such as Pooled OLS and Fixed-Effect estimations are adopted. In this paper, the conventional factors such as fixed capital formation and economically employed labor and domestic credit sizes are controlled. Finally, the empirical results from this paper suggest a strong positively significant relationship between total stocks of institutions, foreign trade and domestic credit development on economic growth of these nations. Moreover, when controlling conventional factors and domestic credit sizes, foreign trade and individual effect of government effectiveness, accountability, rule of law and political stability plays extremely roles in economic development of these nations. Additionally, foreign trade effect on economic growth of these nations has changed over time; increasing sharply, in particular after the ASEAN Free Trade Area was launched in 1992.