What is it about?

The purpose of this paper is to examine the relationship between urbanization and economic growth in ASEAN countries for the period 1993-2014. The Granger causality test and the regression estimation method with static and dynamic panel data (FE, RE, Driscoll and Kraay, D-GMM and PMG) were used. The sample includes seven ASEAN countries: Brunei, Cambodia, Indonesia, Malaysia, Philippines,Thailand and Vietnam

Featured Image

Why is it important?

The results show that at least a causal relationship exists between urbanization and economic growth and urbanization positively impacts economic growth. However, the relationship between urbanization and economic growth is non-linear. The urbanization reaches a threshold after which it may impede the economic growth. The estimated threshold is 69.99 percent for the static model and 67.94 percent for the dynamic model

Perspectives

The decision on the model of urbanization needs to be based on social and environmental considerations as well as market-based economic efficiency. The quality of urbanization manifests in the way that people and businesses perceive when they come to cities and their position in the labor market, urban housing, niche commodity markets, supply chain, collaborative network and physical space for the operation of the business. Most ASEAN countries have not yet reached a high level of urbanization, despite having a number of policies for promoting urbanization to contribute to the economic growth. However, policymakers should find ways to facilitate the development of urbanization that contributes to economic growth, employment growth, environmental sustainability, rather than the pursuit of speeding up the process of urbanization.

Nguyen Minh Ha
Ho Chi Minh City Open University

Read the Original

This page is a summary of: The relationship between urbanization and economic growth, International Journal of Social Economics, February 2018, Emerald,
DOI: 10.1108/ijse-12-2016-0358.
You can read the full text:

Read

Contributors

The following have contributed to this page