Trade, External Shock And Economic Growth In Selected Asean And South Korean Economies

This study examines the impact of trade on economic growth through four main growth channels, namely private domestic investment (PDI), government spending (GOV), manufacturing value added (MVA) and foreign direct investment (FDI), taking into consideration the role of external shock, which is proxied by capital flight. It is particularly important because past studies indicate that trade and economic growth does not show a parallel co-movement, or in other words, high level of trade does not necessarily lead to high economic growth. By using five East Asian economies (i.e. Indonesia, Korea, Malaysia, The Philippines and Thailand) as case studies, autoregressive distributed lag (ARDL) estimation procedure is utilized in order to estimate the impact of trade on economic growth which covers period from 1970 to 2002. The indirect impact procedure is used so as to help us to determine through which channel trade will positively affect economic growth, vice versa. The indirect impact of trade on economic growth is calculated based on the study done by Wacziarg (2001).Several important conclusions can be drawn from the study. The threat of capital flight (and thus negative external shock) is justified in this study. Capital flight could reverse the good prospect of economic growth as had been experienced by five East Asian economies during the 1997 economic crisis. In addition, the calculated indirect impact of trade on economic growth tells us the reason of why trade does not necessarily lead to high economic growth since the indirect impact does not necessarily positive and high through all channels. The main source of low positive or negative effect of trade on economic growth is because of inefficiency in resource allocation (proxied by channels of PDI and GOV) as well as low technological development (proxied by channels of MVA for domestic technological development and FDI for foreign technological diffusion) in East Asian, especially in the case of ASEAN economies. What is important to mention here is that without considering the indirect impact of trade on growth, we may face difficulty to magnify the positive impact of trade on economic growth since we are not guided as to what effort should be undertaken. Based on the framework in this study, we found that in order for ASEAN to emulate the success of Korea in developing its economy, ASEAN has to ensure that they are moving towards greater competitiveness by enhancing the level of efficiency as well as technological development

Exploring the impact of agricultural biotechnology on green investment and economic growth : a comparative study under the RCEP framework

These days, countries are increasingly recognising the need for economic growth and green investment in response to significant environmental degradation. This aspect requires recent studies and policymakers' attention. This paper examines the effects of agricultural biotechnology on green investment and economic growth in China, specifically within the framework of the Regional Comprehensive Economic Partnership (RCEP). The study collected secondary data on China from 2003 to 2022 from the World Development Indicators (WDI). The study examines the relationship between agricultural biotechnology, green investment, and economic growth using an autoregressive distributed lag model (ARDL). It then conducts empirical analysis and verification to support its findings. The findings suggest a strong correlation between agricultural biotechnology, green investment, and economic growth in China. The study assists policymakers in formulating policies that promote green investment and economic growth by utilizing efficient agricultural biotechnology.Hengyi Hu (PhD Student, School of Management, Universiti Sains Malaysia), Tajul Ariffin Masron (Assistant Professor, School of Management, Universiti Sains Malaysia)Includes bibliographical reference

Optimum currency area criteria and volatility in ASEAN

The goal of regional integration is to promote greater macroeconomic coordination, and reduce the degree of macroeconomic volatility, in particular exchange rate fluctuations. This paper investigates how well optimum currency area (OCA) variables will work in the context of the ASEAN region when the Singapore Dollar, given its relative stability, is used as an anchor currency. The results indicate that OCA variables play an important role in explaining bilateral exchange rate volatility. In addition, exchange rate volatility exerts a negative impact on bilateral trade and gross domestic product (GDP). It is also a source of divergence among ASEAN members

Family Ownership, Firm’s Financial Characteristics and Capital Structure: Evidence from Public Listed Companies in Malaysia

Capital structure is identified as one of focal facet in corporate finance branch of learning. It provides comprehension on how firms choose to finance their operations and expansion. The objective of this study is to explore the determinants of capital structure of Malaysian public listed companies. The period of 2001-2006 was selected in this study, which reflected the post Asian financial crisis period. Firm’s financial characteristics consist of size, growth, profitability, liquidity and ability to service debt. Family ownership which was identified as a unique feature in the Malaysian corporate sector was used to measure the effect of corporate governance in capital structure decision. Using panel data approach, this study infers that the role of ownership structure in the form of family ownership though is not significantly related to capital structure, its inclusion in the empirical equation changes the significance of other variables. Except for growth, all other financial characteristics have significant relationships with capital structure.Public - Capital Structure, Family Ownership, Corporate Finance, Corporate Governance.

Can Foreign Investment In Real Estate Improves Host Country's Affordability?

Inflows of foreign capital are necessary to complement the available domestic fund or capital of host countries. Foreign capital may also bring in management skills, latest technology and so on, which later has the potential to be transferred to local firms in host countries. It is expected that foreign capital will elevate host country's affordability. Nonetheless, this argument is very much one-way. Foreign capital is also expected to be able to exert negative consequences such as fuelling up domestic price (either stock market price, and/or real estate price) and failure to effectively transferring knowledge, skills and technologies, leading to unchanged or lower country's affordability level. Hence, this study aims at investigating the effect of foreign investment in real estate (FIRE) on host country's affordability. Using 30 emerging markets as a case for the period of 2000–2011, estimated by using fixed-effect model and complemented by 2-stage least square (2SLS) method, this study found that FIRE has a tendency to generate positive effect on countries' affordability. On the policy implication side, government can continue attracting foreign investment in real estate but it should be done cautiously as the effect is not elastic

Institutional quality as a determinant for FDI Inflows: Evidence from ASEAN

Since the 1980s ASEAN has become an important avenue for FDI from the rest of the world.However, as the importance of FDI as a new source of economic growth engine has been recognized by many, especially other developing countries, other parts of the world are also becoming interested in attracting FDI to their countries.With the current intense competition in attracting FDI, inevitably, ASEAN has to create a better and more conducive business environment to enable it to retain the existing inflows as well as attract others to invest in Malaysia.One avenue that has not been intensively touched so far concerns the role of institutional quality in explaining the behavior of FDI inflows into ASEAN.The result of the analysis reveals the important and significant role of institutional quality in attracting FDI inflows into ASEAN

Sources Of Growth In The Manusfacturing Sector In Malaysia: Evidence From Ardl And Structural Decomposition Analysis

The manufacturing industry has been an important sector in the Malaysian economy for the past three decades. The important role of this industry to the Malaysian economy today is not only because Malaysia depends substantially on manufacturing for its foreign exchange earnings, but also because Malaysia is the main exporter of electrical and electronic products. This study examines the structural changes in the Malaysian economy by utilising two economics tools, namely, the econometric approach using the Autoregressive Distributed Lag (ARDL) model and the input-output approach using Structural Decomposition Analysis (SDA). These two approaches are used to analyse the sources of growth in the manufacturing sector in Malaysia. From both economic approaches, ARDL and IO, the results agreed on the importance of the domestic consumption effect as a source of growth in the economy. The empirical results from this study are very useful guide to the manufacturing industry for the need to generate more domestically oriented products

Regional Effects Of Monetary Policy In China: The Role Of Spillover Effects

This paper uses Structural Vector Autoregressive (SVAR) method to measure the regional effects of monetary policy in China during 1978–2011. The results provide evidence of different regional responses of real variables to monetary policy shocks. This paper proves that M2 is a better monetary policy indicator. We also find that when examining the regional effects of monetary policy in China, the spillover effects among regions are very important in the short run. In the long run, the influence of deposits transfer among regions is much bigger than that of the spillover effects

Do the Global Oil Price Shocks Affect Somalia's Unregulated Exchange Rate Volatility?

The aim of this study to investigate the impact of global oil price shocks on Somalia's unregulated exchange rate volatility. While employing an EGARCH model, the study found that global oil price shocks have significant effect on Somalia's unregulated exchange rate volatility. This suggests that the effect of energy shocks is global phenomenon beyond the control of any regulatory authority and/or trade treats. The results of this paper provide a notable contribution to the literature of energy economics as well as monetary economics. The research also calls for the need of reforming and re-building Somalia's foreign exchange system to withstand the unpredictable shocks of the global oil markets. Furthermore, this study implies that even in times of war and lawlessness, we cannot escape the effect of global energy price shocks. This is an interesting noble contribution that would be worth considering in the energy and economic literature.  Keywords: Exchange Rate Volatility; global oil price; unregulated exchange rate  JEL Classifications: E00; F31; Q43; G15; O13; P1

Foreign investment in real estate and housing affordability

Foreign Investment in Real Estate (FIRE) is gradually becoming an important source of capital to many emerging markets in the world. In one hand, FIRE helps to improve the performance of real estate sector and subsequently upgrade the level of income of host countries. However, on the other hand, the inflows of FIRE may have the effect of increasing the house price. Hence, this study attempts to fill up the under-researched area of pressing issue surrounding the implications of FIRE inflows on host country’s affordability level by focusing on the experience of emerging real estate markets. The approach is specifically designed to be as informative as possible in offering the benefits and costs of luring FIRE into the host countries with respect to house affordability. Generally, this study found that FIRE is beneficial in increasing national income but might be offset by increasing house price