Drivers of Economic Catch-up in Asia: A Study of ASEAN Countries with Comparative Views of China and India

Abstract:This paper conducts a comprehensive examination of the sources of economic growth and catch-up of ASEAN countries since the Asian Financial Crisis, with comparative views of China and India. The study employs different decomposition frameworks to gain insights into the drivers of the Association's economic performance over the 1997–2017 period. Three findings are most notable. First, all ten member states, except for Brunei, recorded a strong catch-up performance, with labour productivity being the leading driver in most countries. Second, the drivers of labour productivity catch-up exhibit some distinctive patterns among countries, which depend on the level of income and economic structure. Third, in all decomposition analyses, ASEAN countries are well below China and India across sources of growth, which tends to suggest that countries in the grouping could improve their performance by enhancing market integration and policy coordination. Although the long-term prospect of ASEAN is bright, the COVID-19 pandemic and the recent military coup in Myanmar have indicated that the road to future prosperity of the region is expected to face formidable challenges.