Interaction of Export Instability and Openness-Growth Nexus In East Asia and Pacific Countries (1990-2006)

Abstract

Problem statement: Because of the importance of the relation between instability of economic variables and making decision for determinants, this is so considerable to find the interaction between instability and economic variables’ activity. Approach: One of the efficacious factors to have a positive trade balance is export that is a factor of GNP growth too. Moreover, openness is an important factor for stimulus export. Results: For above reasons and to survey that what’s the relation of these factors, in this study we try to investigate the effect of Investment and export instability on growth of 22 East Asia and Pacific countries that is a new subject of done articles. We apply panel data method because this method allows us to use more countries in a shorter period of time series data. Using data span is from 1990-2006 (WDI 2008). The result showed that a co-integration relationship between growth and its determinants is supported in the model. The results of panel Random Effect model that is estimated by using data show that: (1) There is a negative relationship between growth and export instability of this set of countries, (2) According to the studied investigation, coefficient of export is about 0.5 that mean the factor of export has greater effect on growth in these countries rather than other factors, (3) The impact of gross fixed capital and labor force is positive on growth in this set of countries. Conclusion/Recommendations: The results of study recommend that the policy of export stability must be to attend in decision of policy makers in these countries.