Amber Khalil, Rifky Prasetya Abadi, Muhammad Safar Nasir

Analysis the effect of globalization and uncertainty on trade openness in ASEAN: A panel quantile regression approach

Introduction

Analysis the effect of globalization and uncertainty on trade openness in asean: a panel quantile regression approach. Analyzes globalization & uncertainty on ASEAN trade openness using panel quantile regression. Globalization increases openness; uncertainty has no effect. Policy advises tech transfer for competitive production.

Abstract

Trade openness is defined as a country's involvement in the global economy through international trade, foreign investment, and capital flows. High levels of trade openness enable countries to capitalize on the vast global market, access foreign technology and capital, and increase economic efficiency and competitiveness. This study focuses on the determinants of trade openness and the institutional environment. This is inseparable from the fact that ASEAN countries have more developing countries than developed countries, so that global shocks have an impact on the domestic economy. This study used a panel quantile regression The findings show globalization has an effect at the quantile levels of 0.25, 0.50, and 0.75 and indicates that increasing globalization also increases trade openness. As globalization increases, socio-economic relations between countries also improve, such as expanding relations between countries for international cooperation and at the 0.90 quantile level, globalization has no effect on trade openness. This means that high levels of globalization do not affect trade openness. The panel quantile ​​of 0.10, 0.25, 0.50, 0.75, and 0.90 indicates that economic uncertainty has no effect on trade openness means countries on economic recovery, the government still applies international trade restrictions to protect domestic entrepreneurs. The implication of the study for the policymakers that need to increase the globalization index to not only foreign trade occurs, but also technology transfer that can encourage high-quality and globally competitive domestic production, thereby supporting the trade-led growth hypothesis.

Review

The study titled "Analysis the effect of globalization and uncertainty on trade openness in ASEAN: A panel quantile regression approach" addresses a highly pertinent topic concerning the economic development trajectories of ASEAN member states. The choice to examine the interplay between globalization, economic uncertainty, and trade openness is timely, particularly given the region's diverse economic structures and susceptibility to global shocks. A significant strength of this research lies in its methodological approach, employing panel quantile regression. This technique is well-suited for capturing heterogeneous effects across different levels of trade openness, moving beyond average effects and thus providing a more nuanced understanding of these relationships in varied economic contexts. This specificity is crucial for informing targeted policy interventions within the developing economies of ASEAN. The findings presented offer interesting insights. The observation that globalization positively influences trade openness at lower and middle quantiles (0.25, 0.50, 0.75) but loses its effect at the highest quantile (0.90) is particularly noteworthy. This suggests a potential saturation point or different dynamics for highly open economies, warranting deeper exploration in the main text regarding the underlying mechanisms or institutional factors that might cause this divergence. Conversely, the consistent finding that economic uncertainty has no effect on trade openness across all examined quantiles (0.10 to 0.90) is intriguing. While the abstract offers a brief interpretation regarding government protection of domestic entrepreneurs during economic recovery, a more robust theoretical or empirical justification for this uniform non-effect would strengthen the argument. Further clarification on how "economic recovery" is conceptualized in relation to "economic uncertainty" within the model would also enhance the paper's clarity. Overall, this study makes a valuable contribution to the literature on trade openness, particularly by providing region-specific insights for ASEAN. The policy implication, emphasizing the need to leverage globalization beyond mere trade to foster technology transfer and competitive domestic production, aligns well with the "trade-led growth hypothesis" and is highly relevant for policymakers in the region. With its robust methodology and pertinent findings, this research holds significant potential to inform strategic economic planning in developing economies. I recommend this paper for publication, provided the authors elaborate further on the interpretative nuances identified, particularly regarding the differential effects of globalization and the consistent non-effect of uncertainty, to fully capitalize on the depth offered by their chosen methodology.

Full Text

Comments

You need to be logged in to post a comment.