(pp.017-031) E. M. Ahmed ‘Trade spillover effects on East Asian economic growth’, World Sustainable Development Outlook, 2012
ELSADIG MUSA AHMED, MULTIMEDIA UNIVERSITY, MALAYSIA
Purpose – This purpose of this study is to investigate the spillover effects of trade on East Asian productivity.
Design/methodology/approach – This study attempts to fill the gaps of previous studies by developing applications of extensive growth theory that show the trade spillover effects on productivity growth of the ASEAN-5 plus-3, namely China, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore and Thailand. It further provides a meaningful statistical analysis in which the first step of the estimation to get the coefficients of the explanatory variables has been used via the econometric approach. In addition, a second step plugs the parameters of the variables into the model in order to compute the contribution rates of productivity indicators including the calculation of the residual of the model (TFP) and GDP contributions used by the growth accounting approach. The TFP is considered a trade spillover effects indicator, which shows the technology transfer to domestic firms and the upgrading of human capital skills.
Findings – The study found that there was a small contribution of exports and imports to TFP growth in these countries during the study period. It confirms that high physical capital input growth resulted in high gross domestic product (GDP) contribution and low TFP contribution with insignificant technological progress experienced by most of these countries, with the exception of Japan and to some extent, South Korea.
Originality/value – The study contributes to gaps left by previous studies in determining that trade spillover effects transferred technology and developed human capital skills to a greater extent in the cases of Japan and the Republic of Korea, and their economies are considered to be productivity-driven.
Keywords Trade, Spillover effects, Sustainable productivity growth, East Asian economies
Paper type Research paper