Book

Description

In the first chapter, this study utilizes the Solow-Swan growth model to analyze the effect of trade (import and export of goods and services) on the economic growth on 26 high- and low-income economies in South East Asia and Southern Africa. This chapter is divided into two sections. In the first section, the import and export models are created and regressed using the Ordinary Least Squares (OLS), Random and Fixed Effects (under the Hausman test) methods. In the second section, the same two models are regressed using the unconditional fixed effect quantile regression method which first introduced by Koenker and Basset (1978). Five quantiles are chosen – 0.05, 0.25, 0.5, .75 and .95. The results suggest a significant and positive relationship exists between trade and economic growth amongst these economies. However, the effect of trade dissipates as the economies become more prosperous. The second chapter seeks to add to the existing body of literature relating to the relationship between trade in services and economic growth in the 26 selected economies in South East Asia and Southern Africa. Two models (import and export) are created, and the 13 variables (data obtained from various international databases) are initially regressed against the natural logarithm Gross Domestic Product (GDP) per capita using the OLS method for benchmarking purposes. To mitigate against possible endogeneity, a two-stage least squares (2SLS) method is employed.