TRADE OPENNESS, OIL PRICES, FINANCIAL INSTABILITY ON ECONOMIC GROWTH IN ASIAN COUNTRIES: EVIDENCE OF SECOND-GENERATION TECHNIQUES

Abstract

Asian economic growth experienced a great increase in their real growth domestic product (RGDP). Consequently, very few countries reached a high level of income and wealth, as well as the majority of them, were below the world average. The study aimed to investigate the influence of financial instability, oil prices and trade openness on economic growth in Jordan, Malaysia, Philippines, Thailand, Indonesia and Singapore. The study employed Westerlund cointegration techniques and found that there is the existence of cointegration linkages among the variables in the all six countries. Moreover, the results of Wald test Granger causality test revealed a bidirectional causality between financial instability and economic growth in Jordan, Philippines, Indonesia and Singapore. However, the result showed one-way causality running from economic growth to financial instability, economic growth to trade openness index in Malaysia, from economic growth to trade openness index in Jordan, from economic growth to oil prices in Philippines, from economic growth to financial instability in Thailand, from oil prices to economic growth in Indonesia, from trade openness index to economic growth in Singapore. In addition, the Panel Dumitrescu and Hurlin heterogeneous causality showed unidirectional causality running from financial instability to economic growth, and from trade openness index to economic growth. Consequently, the government should provide sufficient institutions that can generate relationships among macro stability and economic growth to decreases uncertainty reinforces reliability and increases the general macroeconomic environment. JEL: F43, O40, O43, O53 Article visualizations: