Capital Inflows and Growth: Evidence from Pre-Crises ASEAN Economies

Shibeshi Ghebre Kahsay and Jagdish Handa
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Shibeshi Ghebre Kahsay: Abu Dhabi Women's College, UAE
Jagdish Handa: McGill University, Canada

Chapter 2 in Studies in East Asian Economies:Capital Flows, Exchange Rates and Monetary Policy, 2011, pp 17-52 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractThis chapter uses an endogenous growth framework to examine the effects of the different types of long-term capital inflows (foreign investment, foreign aid and long-term debt capital) on the long-term growth performance of Indonesia, Malaysia, Philippines and Thailand over the period 1970–96, which preceded their financial crises. Its econometric analysis uses stationary tests, cointegration and ECM modeling, as well as VAR techniques and causality tests. Our findings support the endogenous growth arguments for Malaysia, Philippines and Thailand but do not support them for Indonesia. For all four countries, significant positive causation runs from equity capital, public capital and openness to per capita income growth, while long-term debt capital inflows had adverse or insignificant effects on growth.

Keywords: International Capital Mobility; Monetary Policy; Exchange Rates; Economic Growth; Taylor Rule; East Asian Economies; China (search for similar items in EconPapers)
Date: 2011
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