Engine of Growth : The ASEAN-4 case

Abstract:   Indonesia, Malaysia, The Philippines, and Thailand, have all chosen outward-oriented strat-egy over inward-oriented strategy to gain economic growth. This approach was due to the Asian miracles development. Therefore, protectionism had to cave in (Edwards, 1993). This thesis aim with the help of income terms of trade and GDPCAP to study the relation between trade and growth for these countries mentioned. Therefore, see if income terms of trade would work as an engine of growth for these countries. The purpose is to find a posi-tive correlation between the variables. ITT capture the price and volume effects when trade increases. That is why, ITT is used in this thesis, for the purpose that exports alone cannot explain growth if imports are left out. Time series was conducted with help of a unit root test, co-integration, and Granger causal-ity test. In each test made, the result provided showed of statistically significant values, hence, ITT is of relevance for growth in these countries, during 1980-2006.