EXPORTS AND DOMESTIC DEMAND: SOME EMPIRICAL EVIDENCE IN ASEAN-5

Abstract

This study examines the importance of exports and domestic demand to economic growth in ASEAN-5, namely Indonesia, Malaysia, the Philippines, Singapore and Thailand before Asia financial crisis, 1997-1998. The results of the Granger causality test show some evidence of bidirectional Granger causality between exports and economic growth and between private consumption and economic growth. The relationship between investment and economic growth and also between government consumption and economic growth is less conclusive. A successful sustained economic growth requires growth in both exports and domestic demand. Moreover, economic growth will increase domestic demand and exports. There is no strong evidence to suggest that the export-led growth (ELG) strategy is a main cause to Asia financial crisis.