THE RELATIONSHIP BETWEEN TRADE OPENNESS, FOREIGN DIRECT INVESTMENT, GOVERNMENT EXPENDITURE, AND ECONOMIC GROWTH IN ASEAN COUNTRIES
DOI:
https://doi.org/10.2478/eoik-2025-0085Ključne reči:
economic growth, foreign direct investment, government expenditure, trade opennessApstrakt
The paper attempts to examine the nexus between trade openness,
foreign direct investment, government expenditure, and economic
growth in nine selected ASEAN countries between 1994 and 2023. A
panel dataset for the causality between trade openness, FDI, govern-
ment expenditure, and economic growth of nine ASEAN countries,
namely Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malay-
sia, the Philippines, Singapore, Thailand, and Viet Nam between 1994
and 2023 was gathered from the World Development Indicators. Fur-
ther, the panel regression model was employed to estimate the nexus
between these variables in each country both in the short and long
run. Results also revealed that the rise in government expenditure may
decelerate economic growth in the short run, while trade openness
supports the growth of countries in the region in the long run. In terms
of the model for each country, the effect of trade openness, foreign
direct investment, and government expenditure on economic growth
was controversial in specific countries. Findings stated that trade
openness may facilitate the growth in Cambodia, the Philippines, and
Singapore, and foreign direct investment promotes economic growth
in only Thailand, suggesting important differences in structural char-
acteristics and policy transmission mechanisms. However, the rise of
government expenditure may discourage the growth of Cambodia,
Malaysia, the Philippines, Singapore, and Thailand. The article con-
tributes to propose policies to facilitate economic growth and achieve
sustainable development for the region.
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