The Impact of the US-China Economy on the Economic Growth of OIC Member Countries
DOI:
https://doi.org/10.14421/grieb.2023.111-09Keywords:
The Economic Growth, ARDL, US and China’s Economy ImpactAbstract
As countries having sizeable economic scale, the US and China have significant contributions as well as influence on the world economy. Hence, the economic activities performed by both countries have a higher possibility to affect other countries’ economic conditions due to the presence of economic integration among the countries. The study aims to investigate the US-China economy impact which is proxied by a balance of trade (BOT), net foreign direct investment (FDI), and exchange rate (ER) on the economic growth of OIC member countries (EG). The study utilizes data from 1979-2018 and adopts Autoregressive Distributed Lag (ARDL) then applies a bounds testing approach to measure the short and long-run relationship between independent and dependent variables. The finding of the study shows that there is a long-run cointegration between the US-China economy impact on the economic growth of OIC member countries. The short-run ARDL model also indicates that all the independent variables have a significant relationship with the economic growth of OIC member countries across the regions.
Originality/Value: The study comprehends as well as provides a new insight on the influence of the US and China's economic activities on OIC member countries’ economies.
Downloads
Abstract viewed: 126 times
|
PDF downloaded = 113 times
References
Ailan, L., & Tang, B. (2017). US and China aid to Africa: Impact on the donor-recipient trade relations. China Economic Review, 48, 46–65.
Ali, N., & Hussain. (2017). Impact of foreign direct investment on the economic growth of Pakistan. American Journal of Economics, 7(4), 163–170.
Balassa, B. (1994). The theory of economic integration: An introduction. In: Nelsen B. F., & Stubb A. C. G. (eds), The European Union. London: Palgrave.
Blagrave, P., & Vesperoni, E. (2018). The implications of China’s slowdown for international trade. Journal of Asian Economics, 56, 36–47.
Cali, M. (2018, October 16). The impact of the US-China trade war on East Asia. CEPR. https://voxeu.org/article/impact-us-china-trade-war-east-asia
Carvalho, Azevedo, & Massuquetti A. (2019). Emerging countries and the effects of the trade war between US and China. Economies, 7, 40-45.
Chemingui M., & Bchir, M. H. (2010). The future of African trade with China under alternative trade liberalization schemes. African Development Review, 22, 562–576.
Cheong, I., & Tongzon, J. (2018). The economic impact of a rise in US trade protectionism on East Asia. Journal of Korea Trade, 22(3), 265–279.
Cui, L., Sun, Y., Melnikiene, R., Song, M., & Mo, J. (2019). Exploring the impacts of Sino–US trade disruptions with a multi-regional. Economic Research-Ekonomska Istrazivanja, 1(32), 4015–4032.
Dickey, D. A., & Fuller, W. A. (1981). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 15, 37–41.
Didier, L. (2017). South-south trade and geographical diversification of intra-SSA trade: Evidence from BRICS. African Development Review, 29(2), 139–154.
Doku, I., Akuma, J., & Owousu, A. (2017). Effect of Chinese foreign direct investment on economic growth in Africa. Journal of Chinese Economic and Foreign Trade Studies, 10(2), 162-171.
Dong, Y., & Whalley, J. (2012). Gains and losses from potential bilateral US-China trade retaliation. Economic Modelling, 29(6), 2226–2236.
Fergueson, N. (2008, November 17). Team 'Chimerica'. Weatherhead:: Center for International Affairs at Harvard University. https://wcfia.harvard.edu/publications/team-chimerica
Foo, N., Lean, H., & Salim, R. (2019). The impact of China’s one belt one road initiative on international trade in the ASEAN region. North American Journal of Economics and Finance, 101089. https://doi.org/10.1016/j.najef.2019.101089
Ghani, G. M. (2011). The impact of trade liberalization on the economic performance of OIC member countries. Journal of Economic Cooperation and Development, 32(2), 1–18.
Gabriela, Irina, Panait, M., & Voica, C. (2014). BRICS countries challenge to the world economy new trends. Procedia Economics and Finance, 8(14), 605–613.
Ju-Xiang, H., Gong, X., & Wang, S. (2009). Causality relationship between the US-China trade balance and the US and Japan direct investment in China. Systems Engineering - Theory & Practice, 29(6), 6-18.
Hill, C., & Griffiths, W. (2011). Principle econometrics (3rd ed). John Willey & Son.
Hoa, T. V. (2005). Impact of economic policy reform and regional and global shocks on trade and growth in East Asia: Econometric evidence for China. Journal of the Korean Economy, 6(2), 215–244.
Itakura, K. (2019). Evaluating the impact of the US–China trade war. Asian Economic Policy Review, 15, 77-93.
Jiang, B., Li, J., & Gong, C. (2018). Maritime shipping and export trade on 'Maritime Silk Road. Asian Journal of Shipping and Logistics, 34(2), 83–90.
Kerry, L. (2018). Chinese manufacturing in the shadow of the China–US trade war. Economic Affairs, 38(3), 307–324.
Koo, W. W., & Zhuang, R. (2007). The role of exchange rate in Sino-U.S. bilateral trade. Contemporary Economic Policy, 25(3), 362–373.
Krugman, P., & Obstfeld, M. (2000). International Economics (5th Ed.). Addison-Wesley Publishing Company.
Li, C., He, C., & Lin, C. (2018). Economic impacts of the possible China–US trade war. Emerging Markets Finance and Trade, 54(7), 1557–1577.
Lin, J. Y. (2013). Against the consensus: Reflections on the great recession. Cambridge University Press.
Lin, J. Y., & Wang, X. (2018). Trump economics and China–US trade imbalances. Journal of Policy Modeling, 40(3), 579-600.
Liu, P. (2016, April 1). What are the prospects for China’s one belt, one road initiative? ACCA: Think Ahead. https://www.accaglobal.com/an/en/member/member/accounting-usiness/2016/04/insights
Mahato, K. M. (2019). US-China trade war impact on India. Jamshedpur Research Journal, 4(35), 1–58.
Malik. K. (2015). Impact of foreign direct investment on economic growth of Pakistan. American Journal of Business and Management, 4(4), 190–202.
Mankiw, G. (2007). Macroeconomics (6th Ed.). Worth Publishers.
Moeller, J. O. (2018). China trade war : Opportunities & risks for Southeast Asia. ISEAS Perspective Yusof Ishak Institute, (64), 1-7.
Organization of Islamic Coorperation Stastical Comission. (2017). OIC countries export-import and GDP. http://www.oicstatcom.org/oic-stat.php
Pesaran, M., & Shin, Y. (1999). An autoregressive distributed lag modelling approach to cointegration analysis econometrics and economic theory in the 20th century: The Ragnar Frish Centennial Symposium. Cambridge University Press.
Pesaran, M., Shin, & Smith, R. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326.
Rasoulinezhad, E. (2017). China’s foreign trade policy with OPEC member countries. Journal of Chinese Economic and Foreign Trade Studies, 10(1), 61–81.
Rosyadi, S. A., & Widodo, T. (2018). Impact of Donald trump’s tariff increase against Chinese imports on global economy: Global Trade Analysis Project (GTAP) model. Journal of Chinese Economic and Business Studies, 16(2), 125–145.
Sab, R. (2014). Economic impact of selected conflicts in the Middle East: What can we learn from the past ? Working Paper, No. WP/14/100, International Monetary Funds.
Sharma, R. (2019). OPEC vs the United States: Who controls oil prices? Investopedia. https://www.investopedia.com/articles/investing/081315/opec-vs-us-who-controls-oil-prices.asp
Smialek, J. (2019, October 30). Federal reserve cuts interest rates for third time in 2019. The New York Times. https://www.nytimes.com/2019/10/30/business/economy/federal-reserve-interest-rates.html
US Cencus Bureau. (2019, August). Foreign trade top trading partner. US Cencus Bureau. https://www.census.gov/foreign-trade/statistics/highlights/top/top1908cm.html
Uzair, L., & Nawaz, A. (2018). Modelling welfare effects under Pakistan–China free trade agreement. Journal of Chinese Economic and Foreign Trade Studies, 11(3), 202–218.
Yong, W. (2018, July 31). The Chinese view: Ten truths about U.S.-China trade. Los Angeles Times. https://www.latimes.com/opinion/op-ed/la-oe-wang-china-tariffs-20180731-story.html
Yong, W. (2019). Interpreting US-China trade war background, negotiations and consequences. China International Strategy Review, 1(1), 111–125.
Yu, L. (2018). China’s free trade area strategy: An alternative avenue to China’s 'peaceful' rise? Social Science Journal, 10, 15-40.
Zhang, D., Lei, L., Ji, Q., & Kutan, A. M. (2019). Economic policy uncertainty in the US and China and their impact on the global markets. Economic Modelling Journal, 79, 47–56.
Downloads
Published
Issue
Section
License
Copyright (c) 2024 Global Review of Islamic Economics and Business
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Global Review of Islamic Economics and Business is licensed under a
Creative Commons Attribution-ShareAlike 4.0 International License
