Are trade spillover effects on East Asian economic growth productivity driven?

Abstract

Abstract Purpose – The purpose of this paper is to incorporate the spillover effects of trade on East Asian productivity, namely China, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore and Thailand. Design/methodology/approach – This study attempts to fill in the gaps of previous studies by developing applications of extensive growth theory that shows the trade spillover effects on productivity growth of ASEAN 5 plus3. It further provides a meaningful statistical analysis in which, the first step of the estimation to get the coefficients of the explanatory variables that has been used by econometric approach. It can be restated here that in addition, a second step that 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 (total factor productivity – TFP) and GDP contributions being used by growth accounting approach. The TFP is considered be trade spillover effects indicator that is showed the technology transfer to domestic firms and human capital skills upgrading. Findings – The paper finds that there was a little contribution of exports and imports to TFP growth in these countries during all the periods of study. It confirms that high physical capital input growth resulted in high gross domestic product (GDP) contribution and low TFP contribution with insignificant technological progress experiences by most of these countries, with the exception of Japan and to some extent, South Korea. Originality/value – In this respect, the trade spillover effects had transferred technology and developed human capital skills to a greater extent in the cases of Japan and Republic of Korea and their economies considered to be productivity driven economies.

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