Will Southeast Asia be the next global manufacturing hub? A multiway cointegration, causality, and dynamic connectedness analyses

Haibo Wang, Lutfu S. Sua, Jun Huang, Jaime Ortiz and Bahram Alidaee

Emerging Markets Review, 2024, vol. 63, issue C

Abstract: We propose a novel framework to examine relationships among drivers of economic growth in Southeast Asia, a region poised to become a significant manufacturing destination. However, unbalanced economic growth among countries poses risks to multinational companies considering offshoring decisions. Our two-stage framework uses multi-way cointegration analysis and a vector error correction model (VECM) to investigate critical drivers of economic growth. We apply a QVAR model to evaluate dynamic connectedness and spillover effects of offshoring decisions. Using World Bank data, our results show that Southeast Asian countries are interconnected through complex relationships featuring multi-way cointegration and dynamic connectedness, informing evidence-based policy.

Keywords: Cointegration; Vector error correction model (VECM); Quantile vector autoregressive (QVAR); Spillover effects; Time-series data; Offshoring (search for similar items in EconPapers)
JEL-codes: C31 C32 F21 J24 L60 O10 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:63:y:2024:i:c:s1566014124001122

DOI: 10.1016/j.ememar.2024.101217

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