Abstract: This paper applies recursive cointegration analysis to
examine the dynamic changes in Feldstein-Horioka saving-investment
(S-I) coefficients across China and the ASEAN-5 countries over time.
To the extent that the S-I coefficients measure international capital
mobility, the main empirical results are as follows. The recursive trace
statistics show that the investment- savings nexus varies in these six
countries. There is no cointegration between investment and savings in
three countries (China, Malaysia, and Singapore), which means that
the mobility of the capital markets in the three is high and that
domestic investment in them will be financed by the global pool of
capital. As to the other three countries (Indonesia, Thailand, and
Philippines), there is cointegration between investment and savings for
part of the sample period in the three, including before 2002 for
Thailand, before 2001 for Indonesia, and before 2002 for Philippines.
This shows these three countries achieved highly mobile and open
capital markets later.
Abstract: This paper proposes the hypothesis that multilateralism and regionalism are complementary, and that regional income convergence is likely with a like minded and committed regionalism that often has links geographically and culturally. The association between international trade, income per capita, and regional income convergence in founder members of ASEAN and SAARC, is explored by applying the Lumsdaine, and Papell approach. The causal relationships between the above variables are also studied in respective trade blocs by using Granger causality tests. The conclusion is that global reforms have had a greater impact on increasing trade for both trade blocs and induced convergence only in ASEAN-5 countries. The experience of ASEAN countries shows a two-way causal relationship between the flow from trade to regional income convergence, and vice versa. There is no evidence in SAARC countries for income convergence and causality.