The effect of economic integration on economic growth: evidence from the APEC countries, 1989-2000

ISSN： 1097-4954

Source： Global Business and Economics Review, Vol.5, Iss.2, 2005-02, pp. : 176-196

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Abstract

This study adopts the modified growth model to examine whether the APEC integration would promote economic growth among the member countries during 1989-2000. It also compares whether the developed and developing member countries would derive different growth-enhancing effect from the integration. To control for the endogeneity problem, this study re-estimates the modified growth model using the two-stage least squares method. First, the APEC integration has accelerated growth only among the developed countries. The developed countries with better infrastructures would derive higher growth effect from the integration than the developing countries. Second, the open trade facilitated by the APEC integration has contributed to higher growth in the developed rather than developing countries. The developed countries with tradable manufactured products would benefit more from trade increase than the developing countries with raw material products.