In this webinar, Dr Phi Minh Hong and Dr Elodie Mania discussed the importance of export diversification as part of the export-led growth strategy in ASEAN developing economies, and the role of export diversification and sophistication in stimulating economic growth.
ASEAN STUDIES CENTRE WEBINAR
Monday, 26 July 2021 – The ASEAN Studies Centre (ASC) at the ISEAS – Yusof Ishak Institute hosted a webinar on “Rethinking the Export-Led Growth Strategy in ASEAN Developing Economies”. The webinar was delivered by Dr Phi Minh Hong, ASEAN Graduate Fellow of ASC, and Dr Elodie Mania, Assistant Professor at the University of Rouen Normandy, France. The webinar was moderated by Dr Sithanonxay Suvannaphakdy, ASC Lead Researcher (Economics).
Dr Phi kicked off the webinar with an overview on the development of export diversification and its potential benefits. Developing economies tend to specialise in producing and trading commodities and primary goods, which results in greater exposure to adverse external shocks. This issue is more pronounced in ASEAN developing economies, namely Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand and Vietnam. She showed that ASEAN’s export products and partners are less diversified than those of China and the average developing economies in East Asia and the Pacific. Among ASEAN developing economies, Thailand, Indonesia and Malaysia have a higher degree of export diversification than that of Cambodia, Laos, Myanmar and Vietnam.
Dr Phi highlighted the importance of export diversification which should be included as part of the export-led growth strategy in ASEAN developing economies. Greater export diversification reduces export volatility, which in turn contributes to sustainable economic growth. ASEAN Upper-Middle-Income countries such as Malaysia and Thailand should increase exports of existing sophisticated products, while ASEAN Lower-Middle-Income countries such as Indonesia and the Philippines should develop new products and search for new markets for exports.
Dr Mania shared her insights on the role of export diversification and sophistication in stimulating economic growth using cross-country analysis. She analysed the impacts of export diversification and sophistication on total factor productivity growth (TFP) in a framework of Kaldor-Verdoorn law using three country groups over the period 1995-2017. These country groups include 20 countries in Sub-Saharan Africa, 9 for Developing Asia, and 18 for OECD. She explored the direct and structural (indirect) of export diversification and sophistication on TFP by including the individual measures of export diversification and sophistication as well as the interaction term of each measure and manufacturing output growth. Two measures of export diversification include Herfindahl-Hirschman index and Theil index. Export sophistication is measured by the economic complexity index.
Dr Mania’s study reveals that export diversification and sophistication can increase the TFP growth in Developing Asia, including some ASEAN developing economies such as Indonesia, Laos, Malaysia, the Philippines and Thailand. But this will only happen when countries achieve a certain level of industrial development measured by the growth of manufacturing value-added.
The Q&A discussion touched on several related issues such as ASEAN cooperation in the promotion of export diversification among member states, governments’ approaches towards higher-tech exports, the role of big-tech companies, the dynamics of increasing returns, the impact of global supply chains on export diversification and sophistication, the role of FDI in export, and export diversification strategy for developing economies.
Close to 70 attendees from the policy, business and research communities in Singapore and the region participated in the webinar.
