Association Of Southeast Asian Nations Economies Research Articles

Examining the Impact of Sustainable Energy on the Economy: Panel Evidence from ASEAN

Among the fast-developing economies in the Association of Southeast Asian Nations (ASEAN), a significant trend can be observed towards sustainable energy objectives. Although there is a strong trend of social and economic growth in the ASEAN region, the theoretical and empirical significance of sustainable energy is yet to be explored. This study aims to analyse the impact of sustainable energy on the economies of three countries – Indonesia, Malaysia, and Thailand – using yearly observations from the years 2000 to 2019. Several dynamics of sustainable energy are investigated as explanatory variables, while economic trends are explored through GDP growth, financial development, and patent applications. For the purposes of data analysis, descriptive statistics, correlation matrices and fixed and random effect panel models are applied. The study findings of the correlational matrix indicate that there is no higher correlation among the study variables. The results of the panel models provide evidence that carbon emissions have an adverse impact on GDP growth, while the proportion of renewable energy out of total energy positively impacts the growth dynamic. Additionally, carbon emissions adversely impact financial development in all three ASEAN economies. Lastly, electricity prices and carbon emissions are observed to have an adverse effect on patent applications. However, this study has three major limitations, as it fails to apply advanced panel regression models like GMM, only considers three economies out of the total sample of the ASEAN region, and lacks comparative analyses between countries. Future studies are highly recommended to address these limitations.

The impact of COVID-19 on ASEAN

Starting in December 2019, COVID-19 had been spreading across the world on a limited scale for a quarter until March 2020 when the death toll in the countries comprising the Association of Southeast Asian Nations (ASEAN) finally started to mount. However, despite the relatively late outbreak in the region, the ASEAN market had already plunged along with other regional markets across the world amid heightened concern about the economic impact of the biggest viral killer in 2020. In this paper, we examine the economic impact of coronavirus on different ASEAN countries separately by analysing their respective economic figures for the first two quarters in 2020. This allows us to delineate the overall picture of its impact on ASEAN countries as well as to provide an estimation for the future outlook of the ASEAN economic bloc. We propose that the slowing growth, the sluggish recovery of trade and the cross-country transmission of unemployment are three significant risk factors that the ASEAN economies are faced with.

INTRODUCTION — SOUTHEAST ASIA AND THE BELT AND ROAD INITIATIVE: THE POLITICAL ECONOMY OF REGIONALISM, TRADE, AND INFRASTRUCTURE

Since its launch in late 2013, the Belt and Road Initiative (BRI) has become a significant factor in shaping China’s economic and diplomatic relations with the world. China’s increasing clout presents opportunities as well as challenges, especially for the developing economies of the Association of Southeast Asian Nations (ASEAN) which constitute major sites for investment and trade alongside the BRI routes. This special issue examines whether and to what extent China’s economic ascendancy has impacted the proposed ASEAN Economic Community and the respective nations in the region. It deals with this question by grounding the analysis along three themes — institutions at a regional level, industry/sector, and particular ASEAN countries’ economic relationship with China. A total of 12 articles are presented to illuminate the state of affairs at the regional level and in specific ASEAN economies. They point to the importance of managing trade and investment flows stemming from China’s increasingly sophisticated national firms. This in turn hinges on forging ‘rules of the game’ at both the multilateral and bilateral levels, which potentially leads to mutually beneficial industrialization and long-term wealth creation. In addition to summarizing key findings of the articles in the special issue, this introductory essay examines some of the key themes confronting ASEAN in its engagement with the BRI such as institutions, global supply chains, and economic strategies. It concludes with a brief discussion on the impact of the COVID-19 pandemic on the BRI in Southeast Asia, and on ways to enhance regional integration.

Economic growth and methane emission: testing the EKC hypothesis in ASEAN economies

PurposeThe purpose of this study is to analyze the Environmental Kuznets Curve (EKC) hypothesis within the methane (CH4) emission–economic growth nexus among the six Association of Southeast Asian Nations (ASEAN) countries from 1985 to 2012.Design/methodology/approachThe study employs dynamic panel data estimation approaches such as mean group (MG) and pooled MG (PMG) techniques.FindingsThe findings reveal that the EKC hypothesis for the CH4 emission in these economies proves to be valid. In other words, economic growth causes CH4 emissions to decrease. Nevertheless, energy consumption is deteriorating the environment by enhancing CH4 emissions in these countries.Originality/valueThe ASEAN region has experienced substantial economic growth over the previous few decades. Nevertheless, pollution has also increased manifolds in this region. Methane is a more potent greenhouse gas (GHG) as compared to carbon dioxide (CO2) and a major source of socio-economic issues in the ASEAN region. This study is the first in the existing literature on the EKC hypothesis examining the role of economic growth on CH4 emissions in the selected ASEAN countries. The outcomes of this study could be really beneficial for the policymakers in this region regarding sustainability and economic development.

Total‐Factor Energy and Emission Efficiencies of ASEAN and Other Asian Economies

This research uses the slack‐based measure data envelopment analysis to compute the energy and emission efficiencies of Association of Southeast Asian Nations (ASEAN) and other Asian economies during the 2001–2017 period, employs the Malmquist productivity index to check for the main source of efficiency score changes due to technical changes, and then applies panel Tobit regressions to determine the factors explaining the efficiencies. Our empirical results show that the energy efficiency scores of ASEAN economies had been catching up to other Asian economies after the Global Financial Crisis, whereas the emission efficiency scores of various ASEAN economies had been falling behind other Asian economies over the same period. The main source of efficiency score changes over time is efficiency changes and not technical changes. Decreases in the fossil fuel ratio of net electricity generation and the secondary industry ratio within total industry improve both lead to improvements in energy and emission efficiencies.

CHINA’S OUTBOUND INVESTMENT IN ASEAN ECONOMIES IN THREE PERIODS: CHANGING PATTERNS AND TRENDS

Southeast Asian economic sentiments toward China tend to dither between competitive and cooperative instincts. Initial warmth among the Association of Southeast Asian Nations (ASEAN) members toward the China-led Belt and Road Initiative (BRI) is slowly giving way to project-related concerns as well as fears that “China is buying the world”. This paper examines Chinese outward foreign direct investment (OFDI) in global and ASEAN contexts shortly after the start of the country’s “going out” strategy. The analysis draws on country- and firm-level investment data. It shows that a handful of ASEAN economies have become more important to Chinese investors as their motivations, capabilities and needs evolve. Nonetheless, with the exception of three (Cambodia, Laos and Myanmar), ASEAN economies have not become “reliant” on Chinese investment post-BRI launch, once one considers the increased weight China carries as a foreign investor in the developing world. This is either because these countries generally do not rely on FDI, or because traditional foreign investors from industrialized economies and more advanced ASEAN member states are far more entrenched than Chinese investors in the host economies.

Comment on “The Southeast Asian Economies in the Age of Discontent”

Comment on “The Southeast Asian Economies in the Age of Discontent”

An Investigation of an Adaptive Neuro-Fuzzy Inference System to Predict the Relationship among Energy Intensity, Globalization, and Financial Development in Major ASEAN Economies

The enhancement of the financial sector significantly drives a nation’s economy and thereby increase energy intensity. Considering this situation, the current study aims to examine the link between globalization and financial advancements with the energy intensity of the top 5 ASEAN (Association of Southeast Asian Nations) economies. The development structure of the ASEAN region is considered significant for having stable growth. The authors used the annual data from 1990 to 2018 for five of the largest ASEAN economies: Singapore, Malaysia, Thailand, Indonesia, and the Philippines. The present study used novel methodology, the Adaptive Neuro-Fuzzy Inference System (ANFIS), to examine the nonlinear behaviour among globalization, financial development, and energy intensity in the top 5 ASEAN countries. The study results using ANFIS confirm that globalization and financial development are positively correlated and have a significant impact on the energy intensity level in the top ASEAN countries. The results further suggest that globalization and financial development increase the level of energy intensity more in the countries that are developed relative to their peers in the top ASEAN countries. Moreover, the outcomes of ANFIS also suggest that those countries, which are more globalized and financially developed, have more potential to increase the level of energy intensity. Therefore, the government needs to focus more on projects that involve renewable energy and are environmentally friendly.

Examining the relationship between finance, institutions and economic growth: evidence from the ASEAN economies

This study investigates the role of financial and institutional development on economic growth in the Association of Southeast Asian Nations (ASEAN) economies from 1995 to 2017 using a dynamic panel estimator. Financial development is instrumental in promoting economic growth; however, the effect of financial institutions and financial markets can differ. In recent years, the ASEAN economies have launched financial and institutional integration initiatives towards the goal of an integrated ASEAN Economic Community, which can have a profound impact on economic growth. The estimated results show that financial institutions are positive and significant towards economic growth, while financial markets are insignificant. Equally important, institutional quality plays a significant and positive role in economic growth. More interestingly, the study finds that institutional development is complementary to financial institutions and markets. Member states should emphasise on further financial integration across the ASEAN economies, allowing for the development of financial institutions and markets alongside improvements in institutional quality to increase the effectiveness of financial development.

Impact of FDI Inflows on Poverty Reduction in the ASEAN and SAARC Economies

The aim of this paper is to reinvestigate the impact of foreign direct investment (FDI) inflows on welfare or poverty reduction in the Association of Southeast Asian Nations (ASEAN) and the South Asian Association for Regional Cooperation (SAARC) economies. We used FDI net inflows per capita and the United Nations Development Program’s Human Development Index (HDI) as the principal variables ranging from 1990 to 2014. Our analyses confirm the positive and strongly significant relationship between FDI net inflows and poverty reduction in Asia. However, it indicates significant differences between South Asia and Southeast Asia. Generally, we find that FDI has a greater impact on welfare in SAARC countries than in ASEAN countries. Our results hold true for both HDI and real gross domestic product (GDP), and are shown to be robust using both panel and pool model specifications.

Internet penetration, human capital and economic growth in the ASEAN economies: evidence from a translog production function

ABSTRACTThis study examines the effects of human capital formation and Internet penetration on economic growth. The Internet encourages economic growth by providing innovative applications and opportunities through a new medium of information exchange. The growth potential that the Internet provides, however, is dependent on the human capital formation of an economy to fully absorb the potential capabilities of the Internet. This study employs a panel dataset of 10 Association of South-East Asian Nations (ASEAN) economies from the period of 1999–2014 and examines the relationship using a translog production function model. The estimated results report that human capital formation and Internet penetration is positive and significant towards economic growth. Furthermore, human capital formation and the Internet interacts positively and is significant to economic growth, providing support for the absorptive ability of human capital. The ASEAN economies should continue to adopt policies that encourage human capital formation and support the development of the communication technology sector to promote affordability and accessibility of the Internet across the region.

Competition among China and ASEAN-5 in the US Market: A New Extension to Shift-Share Analysis

The United States has a robust trade and investment relationship with China and the Association of Southeast Asian Nations (ASEAN). ASEAN is collectively the fourth-largest trading partner, and China is one of the largest trade partners of the United States, the largest export destination for China. Thus, China and ASEAN countries are competing in the US market intensively. The purpose of this paper is to calculate the net gains or losses for the ASEAN-5 Members and China during 1993 and 2007 in the US market. There are two main contributions of this paper: one is to dynamically estimate the net shifts of the economies as compared to the traditional comparative static approach; the other is to extend the shift‐share analysis to attribute the net gains or losses to competing exporters. This study adopts the widely used shift-share analysis technique to exam the net gains or losses for the ASEAN-5 and China during 1993-2007 in the Unites Sates market. The paper provides a new extension to the shift‐share analysis to attribute the net shift to competing economies with a dynamic approach. The paper applies the methodology to the competition among China and ASEAN-5 in the US import market with the data drawn from World Integrated Trade Solution (WITS), a data consultation and extraction software developed by the World Bank. The discussion focuses on three periods: 1993-1997, 1998-2002 and 2003-2007. In general, China performs the best among the competing economies. Among the ASEAN-5 Indonesia, Malaysia and Thailand perform better than the other two members. During the first period, all economies have positive export growth as the actual export growth shows. However, in terms of net shift, only China and the Philippines are the winners with positive value of net shifts. During the second period, China stands out while the ASEAN economies show negative net shifts values. Similar is the case for the third period. In terms of the industries, China focuses on different industries during the thee periods, and the ASEAN economies depend heavily on a few industries. China’s gains in these industries are much bigger than the ASEAN economies’ gains in value. The ASEAN economies gain in small numbers of industries with small values. When attributed the gains or losses to competing economies, China only loses to the Philippines during 1993-1997, and gains from all competing economies during all periods. Though net losers, the ASEAN-5 also gain from other competing economies. For example, Indonesia gains from Singapore and Thailand during 1993-1997, from the Philippines and Singapore during 1998-2002, from Malaysia, the Philippines and Singapore during 2003-2007. The trade war between the United States and China provides opportunity for the ASEAN countries in the Unites Sates market, however, there are negative impacts on the ASEAN countries as well. The ASEAN countries are more vulnerable. Keywords: shift-share analysis, export competitiveness, Asia, ASEAN, China.

아세안 산업분석: 상장기업을 중심으로 (ASEAN Industry Analysis: A Preliminary Study)

Korean Abstract: 기업재무자료를 이용하여 아세안 전체 및 국가별로 산업별 규모, 수익성, 성장성 등 산업특성을 동태적으로 분석하면 우리 정부의 아세안 경제협력과 기업의 아세안 시장진출에 있어서 산업특성에 따른 전략적 판단의 유용한 근거로 사용할 수 있다. 이 보고서는 이러한 작업을 위한 시범적 성격의 연구로 이번 연도에서는 우선 아세안 6개국 상장기업의 2017년도 횡단면 자료를 이용하여 산업분석을 수행하고 이후 단계의 시계열 자료 구축과 분석을 위한 후속연구를 계획하였다 English Abstract: In order to improve the quality of decision-making by Korean policy makers and members of the business community with respect to Korea's economic engagement with the Association of Southeast Asian Nations (ASEAN), better data and more systematic analysis are needed. One way to achieve this is to use a type of industry analysis where firm-level data are aggregated to an industry level over time and industry characteristics such as size, profitability and growth potential are identified and analyzed in a systematic way. The output can be used as a useful basis for strategic decisions as to how Korea should effectively engage the ASEAN economies. Common approaches to ASEAN industries tend to use macro data such as industrial production in the national accounts framework or trade and foreign direct investment statistics, while it has been rare to use micro data gathered at the firm level. Even when firm-level data are used, it is usually in the form of surveys with a narrow focus on business decisions and sentiments. Survey data on ASEAN industries tend to be limited in representation, data continuity, and detailed information on corporate finance. In this study, we adopt a dynamic industry analysis framework from Chang (2014), which aggregates firm-level data to an industry level to classify ASEAN industries according to their characteristics. Specifically, we analyze market capitalization, assets, sales, and profitability of listed firms in six major ASEAN countries. This is a pilot study and should be regarded as a first installment of a long series of investigations. We have to adopt a sequential approach due to the challenges of obtaining high-quality firm-level data in all ASEAN countries in a comparable format. Expanding beyond listed firms poses a considerable challenge and we add a discussion of how we plan to expand our future research in the conclusion of this report.

Empirical Analysis of Growth Slowdown in Asean

Robust economic growth across the members of the Association of Southeast Asian Nations (ASEAN) has lifted millions out of poverty. Nevertheless, there are concerns about whether growth will be derailed in the future. This paper provides a comprehensive analysis of growth slowdown for the ASEAN economies which are at different levels of development. We aim to answer two questions: First, are determinants of economic slowdown likely to differ across income groups? Second, what are the probabilities that economies in ASEAN will experience a growth slowdown in the near future? We construct a sample of 107 economies including ASEAN economies, Greater China economies, as well as sub-national economies of India and Indonesia. The sample spans the period 1993-2013. We first classify these economies into four different income groups: low-income economies, lower-middle-income economies, upper-middle-income economies and high-income economies using the criteria proposed by Felipe (2012). Next, we adopt the methodology of Eichengreen et al . (2012) to create a dummy variable representing the occurrence of growth slowdown episodes in each income group. We then run income group-specific logistic regressions to identify the determinants of growth slowdown and use Bayesian Model Averaging (BMA) techniques as a robustness check for our empirical findings. Using the regression results, we compute economy-specific predictive probabilities of growth slowdown over the period 2012-2017. Overall, the level of Gross Domestic Product (GDP) per capita and human capital formation appear as important determinants of growth slowdown in all income groups. However, aside from these two variables, growth slowdown tends to be associated with different factors at different levels of development. Most notably, FDI inflows is an important determinant of growth slowdown for low-income and lower-middle-income economies while employment in the tertiary sector affects the probability of growth slowdown of lower-middle-income, upper-middle-income and high-income economies. Furthermore, we find that on average, ASEAN economies have a one-in-five chance of experiencing growth slowdown over the period 2012-2017. In terms of policy implications, the economy-specific predictive probabilities we compute may serve as early warning signs for policy-makers. Meanwhile, results from the regression analyses provide a roadmap for policy intervention to combat the risk of growth slowdown.

Impending Strategic Business Alliance of ASEAN–India: An Experiential Conjecture

A dynamic export demand model of India–Association of Southeast Asian Nations (ASEAN) competitiveness is estimated that explicates India’s strategic export behaviour to the nth country in ASEAN in relation to the import function and the unit value of exports of India implicit to the local price level of the consumer country. The research article identifies the structure within which improvement of connectivity of India’s technical expertise could be extended to ASEAN for comprehensive and wide-ranging economic cooperation. The study’s inferences contribute in entailing how the ASEAN community recognises the need to provide necessary capacity building and to initiate reforms for enhancing their business competitiveness and to upgrade their national enterprises at a more sophisticated level determining their future competitiveness. While, on one hand, it seems that economic integration will remain the key to ASEAN competitiveness in the countenance of vicious competition in the global marketplace, on the other hand, the trade and investment relations of the ASEAN with other countries, particularly with developed economies, will also foster their investment development path and prosperity. In addition to the possibilities of India–ASEAN integration, other challenging efforts for governance would narrow the development gaps among ASEAN economies. This corroborates prospects for India in a constructive manner yielding association within the ASEAN economic framework that will eventually congregate with the affiliation. The findings entail that economists pay much more attention in identifying other sources of permanent and Asian country-specific real changes to explain economic fluctuations in ASEAN economies.

What drives OFDI? Comparative evidence from ASEAN and selected Asian economies

PurposeThe purpose of this study is to examine the factors that are influential on outward foreign direct investment (OFDI). A sample of four Association of Southeast Asian Nations (ASEAN) countries is compared with dominant Asian economies during 1981-2013.Design/methodology/approachThe authors used time series data for analysis. An econometric model using ordinary least squares, with a series of complementary tests, was estimated for every country to determine the variables affecting OFDI.FindingsThe results depict that exchange rates, income and human capital affect the OFDI of most of the countries in the sample. For comparatively advanced and dominant economies (i.e. China, Japan, South Korea and India), openness is the most influential variable, whereas income levels and exchange rates are dominant factors in case of ASEAN economies. Overall, different types of endowments have a different impact for every country.Originality/valuePrevious studies have primarily examined advanced countries’ OFDI. This work adds to the literature by focusing on ASEAN economies and by making a comparison with the dominant Asian economies. Furthermore, the validity and stability of the model is tested with a series of specification tests. In this way, this work is a useful source of information for every stakeholder.

Assessing the Impact of ASEAN Economic Integration on Labour Markets

Enhancing regional economic integration, both across Member States and with their neighbours in the Asia-Pacific region, has become an important priority in Association of Southeast Asian Nations (ASEAN). Building on the ASEAN Free Trade Area, ASEAN has been implementing the ASEAN Economic Community (AEC) since 2007, scheduled for completion in 2015. This study estimates the implications of the regional initiatives on ASEAN Member States using a cutting-edge computable general equilibrium model. In addition to gauging the effects on welfare, trade and economic structure, it considers the ramifications for markets for seven categories of labour defined at the occupational level (three types of skilled labour, three types of semi-skilled labour and unskilled labour). It also includes estimates of the distributional effects of these initiatives for labour compared with other factors (capital and land) and on gender. In general, the paper estimates impressive welfare and export gains from deepening and expanding economic cooperation. These gains are larger than those estimated in other studies because our approach – under the assumption of persistent unemployment for some categories of labour – also models how overall employment would increase as liberalization improves the competitiveness of ASEAN economies. Thus, even though we expect these initiatives to generate large returns to ASEAN countries and to labour overall, it is important for governments to take into account the mixed effects on the distribution of these gains and act accordingly to ensure that the benefits are fairly spread.

Exchange Rate Volatility and Intra‐Asia Trade: Evidence by Type of Goods

AbstractThis paper examines the impact of intra‐Asia exchange rate volatility on intra‐Asia trade in primary goods, intermediate goods, equipment goods and consumption goods from 1980 to 2009. For Asia, the evidence shows that as intraregional exchange rate volatility increases, intraregional exports in these goods fall. This adverse impact is even more pronounced in the subregion of Association of Southeast Asian Nations (ASEAN)+5 comprising ASEAN member countries plus the People's Republic of China; Hong Kong, China; Japan; the Republic of Korea; and Taipei, China; and especially among intermediate and equipment exports. Again, the impact magnifies in an even smaller subgroup excluding the smaller ASEAN economies. These results underline the significant impact of exchange rate volatility on the region's production networks. For South Asia, however, exchange rate volatility appears to have a positive impact on exports. Still, caution is warranted given that South Asian economies trade relatively little with each other.

THE PROSPECTS OF ASEAN ECONOMIC COMMUNITY

The world trading environment has changed during the last three decades, especially on the increasingtendency of regionalization. While ubiquitous regionalization is regarded as the newnecessity, recent studies provide mixed views on the effectiveness of the current development ofeconomic integration among the member countries of Association of Southeast Asian Nations(ASEAN). ASEAN regionalization has been commenced through AFTA in 1992 and recentlyASEAN is moving toward further economic integration under the ASEAN Economic Community(AEC), which is planned to be implemented by 2015. Based on the characteristics of the ASEANtrade and investments, this research provides an outlook on the prospect of AEC. First, it providespicture related to the tendency of each of the ASEAN members in regard to their tradingpatterns. Second, it provides the outlook concerning the current structure and developmentalphases of the ASEAN economies. Finally, it provides information about the gaps of developmentamong the ASEAN economies, particularly between the ASEAN-6 and the ASEAN-CLMV.

Engaging Small and Medium Enterprises in Production Networks: Firm-Level Analysis of Five ASEAN Economies

The Association of Southeast Asian Nations (ASEAN) small and medium enterprises (SMEs) are under scrutiny for their engagement in production networks following recent emphasis on increasing intra-regional trade, rebalancing, and inclusive growth in Asia. Using a data set covering 5,900 firms in five ASEAN economies at different stages of development, this paper analyses the participation of SMEs in production networks, determinants, and policy implications. It finds that although large firms dominate production network engagement in ASEAN economies, there are signs that SMEs have modestly increased their participation since the late-1990s. This is linked to firm-specific factors (e.g., firm size, foreign ownership, skills, technological capabilities, and access to credit) as well as a supportive business environment. Tackling residual supply-side and policy constraints can further the participation of ASEAN SMEs in production networks.