Correlation of Economic Growth and Selected Economic Variables in Asean Region

Abstract

As per ADB, growth in each ASEAN member countries differ in terms of investment, consumption, oil prices and external demand. Likewise, potential growth is defined as the maximum rate of growth that the economy can achieve with macroeconomic stability. Growthslowed in 7 of the 10 ASEAN economies, edging down the sub-regional average to 4.4% in 2015. In the study, the government learned various factors that can be used for their policy development and improvement of infrastructure. The researchers determined how Infrastructure Spending, FDI, Employment Ratio and Foreign Aid affect the Economic Growth of the entire Southeast Asian economies.After performing several regression models, it emerged that only Infrastructure Spending was able to significantly predict and cause significant relationship with Economic Growth. More over the value of the R-square relates that 99.4% of the variations in Economic Growth are explained and accounted from Infrastructure Spending. This emphasizes and support theories in Development Economics that indeed, the presence of Infrastructure fuels business activities leading to economic growth. Secondary data pertaining to different economic variables such as growth rate, infrastructure, foreign aid direct investment and employment of ten ASEAN member countries were taken from Bloomberg and other government agencies .The proponents used 30 years as coverage of the study. The researchers utilized regression analysis and Markov for the analysis of data.The study also presented the forecasted values of the different variables of the ASEAN member countries.