AN EMPIRICAL ANALYSIS OF THE DETERMINANTS OF LONG-RUN GROWTH AND TECHNICAL PROGRESS IN SOUTHEAST ASIA: A COMPARATIVE STUDY OF INDONESIA, MALAYSIA, THE PHILIPPINES, SINGAPORE AND THAILAND

This research work is an empirical analysis of the determinants of long-run growth and technical progress in five Southeast Asian countries, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, i.e., the ASEAN countries, during the last three decades. We ask the fundamental question of why these economies have grown, and concentrate on the nature of technical progress behind the growth process. We have tested different endogenous growth models, and have analyzed whether the determinant of technical progress proposed by each of the models is part of the long-run production function. The analysis concentrates on the individual countries, in an attempt to point out differences in the growth process and in the nature of the technical process associated to it. Our empirical findings indicate that an important determinant of long-run growth in the ASEAN countries is imports of foreign technology. However, none of the variables pointed out by recent endogenous growth models, i.e., aggregate capital, education, government capital expenditures, is capable of generating endogenous growth, as defined by these models. Even the role of exports, except in Singapore, is not so clear. Education, exports of machinery and GDP growth are important determinants of TFP growth in all five ASEAN countries, and Japanese FDI appears to be particularly important in Singapore. We have found complementarity between the level of education and Japanese FDI, as well as between the former and imports of machinery. However, we conclude that none of the determinants analyzed, separately, is capable of accounting for the growth of these countries, and that only a sustained big-push package can be responsible for the increase in productivity and growth in the region.