The People's Republic of China as an engine of growth for developing Asia? Evidence from vector autoregression models

Donghyun Park, Kwanho Shin

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Developing Asia has traditionally relied on exports to the United States (US) and other industrialized countries for demand and growth. As a result, the collapse of exports to the US and other industrialized countries during the global financial and economic crisis has sharply curtailed gross domestic product (GDP) growth across the region. The emergence of the People's Republic of China (PRC) as a globally influential economic force is fueling hopes that it can supplement the US as an additional source of demand and growth. The central objective of this paper is to use vector autoregression (VAR) models to empirically investigate whether exports to the PRC have a significant and positive effect on the GDP of nine developing Asian countries. The study's results from a three-variable VAR model indicate that PRC's imports have a significant positive effect on the GDP of regional countries. However, the study's results from a four-variable VAR model indicate that the PRC's apparently positive impact reflects the US' demand for Asian goods, rather than independent demand from the PRC. Therefore, overall, the study's evidence suggests that the PRC is not yet an engine of growth for the rest of the region.

Original languageEnglish
Pages (from-to)1-42
Number of pages42
JournalADB Economics Working Paper Series
Volume175
Publication statusPublished - 2009 Dec 1

Fingerprint

vector autoregression
engine
gross domestic product
Gross Domestic Product
China
demand
evidence
economics
economic crisis
financial crisis
supplement
import
Asia
Vector autoregression model
Gross domestic product
effect
Developed countries

ASJC Scopus subject areas

  • Economics and Econometrics
  • Geography, Planning and Development
  • Political Science and International Relations

Cite this

@article{2413f3822c0e4c948ad03ec3095e34a1,
title = "The People's Republic of China as an engine of growth for developing Asia? Evidence from vector autoregression models",
abstract = "Developing Asia has traditionally relied on exports to the United States (US) and other industrialized countries for demand and growth. As a result, the collapse of exports to the US and other industrialized countries during the global financial and economic crisis has sharply curtailed gross domestic product (GDP) growth across the region. The emergence of the People's Republic of China (PRC) as a globally influential economic force is fueling hopes that it can supplement the US as an additional source of demand and growth. The central objective of this paper is to use vector autoregression (VAR) models to empirically investigate whether exports to the PRC have a significant and positive effect on the GDP of nine developing Asian countries. The study's results from a three-variable VAR model indicate that PRC's imports have a significant positive effect on the GDP of regional countries. However, the study's results from a four-variable VAR model indicate that the PRC's apparently positive impact reflects the US' demand for Asian goods, rather than independent demand from the PRC. Therefore, overall, the study's evidence suggests that the PRC is not yet an engine of growth for the rest of the region.",
author = "Donghyun Park and Kwanho Shin",
year = "2009",
month = "12",
day = "1",
language = "English",
volume = "175",
pages = "1--42",
journal = "ERD Working Paper Series",
issn = "1655-5252",
publisher = "Asian Development Bank",

}

TY - JOUR

T1 - The People's Republic of China as an engine of growth for developing Asia? Evidence from vector autoregression models

AU - Park, Donghyun

AU - Shin, Kwanho

PY - 2009/12/1

Y1 - 2009/12/1

N2 - Developing Asia has traditionally relied on exports to the United States (US) and other industrialized countries for demand and growth. As a result, the collapse of exports to the US and other industrialized countries during the global financial and economic crisis has sharply curtailed gross domestic product (GDP) growth across the region. The emergence of the People's Republic of China (PRC) as a globally influential economic force is fueling hopes that it can supplement the US as an additional source of demand and growth. The central objective of this paper is to use vector autoregression (VAR) models to empirically investigate whether exports to the PRC have a significant and positive effect on the GDP of nine developing Asian countries. The study's results from a three-variable VAR model indicate that PRC's imports have a significant positive effect on the GDP of regional countries. However, the study's results from a four-variable VAR model indicate that the PRC's apparently positive impact reflects the US' demand for Asian goods, rather than independent demand from the PRC. Therefore, overall, the study's evidence suggests that the PRC is not yet an engine of growth for the rest of the region.

AB - Developing Asia has traditionally relied on exports to the United States (US) and other industrialized countries for demand and growth. As a result, the collapse of exports to the US and other industrialized countries during the global financial and economic crisis has sharply curtailed gross domestic product (GDP) growth across the region. The emergence of the People's Republic of China (PRC) as a globally influential economic force is fueling hopes that it can supplement the US as an additional source of demand and growth. The central objective of this paper is to use vector autoregression (VAR) models to empirically investigate whether exports to the PRC have a significant and positive effect on the GDP of nine developing Asian countries. The study's results from a three-variable VAR model indicate that PRC's imports have a significant positive effect on the GDP of regional countries. However, the study's results from a four-variable VAR model indicate that the PRC's apparently positive impact reflects the US' demand for Asian goods, rather than independent demand from the PRC. Therefore, overall, the study's evidence suggests that the PRC is not yet an engine of growth for the rest of the region.

UR - http://www.scopus.com/inward/record.url?scp=77949395554&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=77949395554&partnerID=8YFLogxK

M3 - Article

VL - 175

SP - 1

EP - 42

JO - ERD Working Paper Series

JF - ERD Working Paper Series

SN - 1655-5252

ER -