Impact of near economic center on the economic growth of neighboring country

Abstract

Purpose: This study estimates the impact of growth transmitted from a near economic center (NEC) to neighboring countries in boosting the growth of Asian countries. Design/methodology/approach: This study constructs the NEC of a country and combines it with the Penn World Tables database. The study estimates the impact of NEC on the economic growth of Asian countries over the period 1950–2019. The study also identifies the factors that boost the delivery of neighboring effects. Findings: Estimation results show that a country’s output growth increases by about 0.14% when NEC’s output growth increases by 1%. Practical implications: This study suggests that Asian growth benefited from a developed country that transmits economic prosperity to neighboring countries. Social implications: This study suggests that a country should have a good economic relationship with neighboring countries to boost economic growth. Originality/value: This study contributes to the existing literature as follows: First, this is the first study that investigated spatial externality in growth between neighboring countries in Asia. Secondly, this study empirically tests the flying geese model in Asian growth. Thirdly, the study investigates the factors that facilitate growth spillover between countries.