IMPACT OF INDO-ASEAN EXPORT ON ASEAN INTEGRATION

NAME OF ARTICLE

IMPACT OF INDO-ASEAN EXPORT ON ASEAN INTEGRATION

IMPACT OF INDO-ASEAN EXPORT ON ASEAN INTEGRATION

Dr.Debesh Bhowmik

(Retired Principal and Associated with The Indian Econometric Society)

Abstract

In this paper, author endeavors to show the impact of Indo-ASEAN export on trade and financial integration of ASEAN taking intra export share, FDI inflows, REER ,GDP growth rate and openness of ASEAN as determinants during 1994-2017 and also tried to show the relationship between Indo-ASEAN export , export concentration index and export diversification index of ASEAN during the same period through Johansen co-integration test and vector error correction model and Granger causality test. The paper concludes that Indo-ASEAN export has been stipulating at the rate of 13.89% per year during 1994-2017 having three upward structural breaks in 2002, 2005 and 2010 with two co-integrating equations with FDI inflows, intra-export share, REER, GDP growth rate, and openness of ASEAN. There is long run causality from FDI inflows, intra-export share, REER, GDP growth rate and openness of ASEAN to Indo-ASEAN export since co-integrating equation 2 tends to equilibrium with the speed of adjustment of 23.52% per year. There is short run causality running from intra-export share of ASEAN to Indo-ASEAN export but other variables have no short run causality. Long run causality was visible from export concentration index and export diversification index of ASEAN to Indo-ASEAN export but they have no short run causality.

Key words-Indo-ASEAN export, short run causality, long run causality, co-integration, vector error correction model, trade integration

JEL classification –C22,F14,F15,F36

The paper concludes that Indo-ASEAN export has been stipulating at the rate of 13.89% per year during 1994-2017.It has three upward structural breaks in 2002, 2005 and 2010 respectively. Indo-ASEAN export has two co-integrating equations with FDI inflows, intra-export share, REER, GDP growth rate, and openness of ASEAN during 1994-2017.VECM showed that Indo-ASEAN export influenced negatively to FDI inflows and intra export share of ASEAN insignificantly. On the other hand, Indo-ASEAN export is positively related with REER significantly and positively related with GDP growth rate and openness insignificantly during 1994-2017.Cointegrating equations explained that there is long run causality from FDI inflows, intra-export share, REER, GDP growth rate and openness of ASEAN to Indo-ASEAN export since co-integrating equation 2 tends to equilibrium with the speed of adjustment of 23.52% per year. There is short run causality running from intra-export share of ASEAN to Indo-ASEAN export but other variables have no short run causality. Bi-directional causality was observed between export concentration index and export diversification index of ASEAN and there is uni-directional causality from Indo-ASEAN export to export concentration index of ASEAN. Long run causality was visible from export concentration index and export diversification index of ASEAN to Indo-ASEAN export but they have no short run causality.