## A New Look at the Determinants of Growth in Asian Countries

_IMF Working Papers, September 3, 2015_

## Source details

**Canonical URL:** [A New Look at the Determinants of Growth in Asian Countries](https://www.imf.org/en/publications/wp/issues/2016/12/31/a-new-look-at-the-determinants-of-growth-in-asian-countries-43246)

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## Bibliographic details
- Authors: Manuk Ghazanchyan, Janet Gale Stotsky, Qianqian Zhang
- Published: September 3, 2015
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513524535.001

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### Summary and Main Findings
- Study examines drivers of growth in Asian countries with focus on: investment, the exchange rate regime, financial risk, and capital account openness.
- Data: panel data set of a sample of Asian countries over the period 1980 to 2012.
- Key empirical results:
  - Private and public investments are strong drivers of growth.
  - More limited evidence that reduced financial risk supports growth.
  - More limited evidence that higher foreign direct investment supports growth.
  - The exchange rate regime does not appear to be a strongly significant determinant of growth, but some specifications suggest that more flexible regimes are beneficial.
  - Financial crises have a stronger dampening effect on growth in countries with more open capital accounts.

### Methodology and Scope
- Empirical approach: panel data analysis covering a sample of Asian countries.
- Time coverage: 1980 to 2012.
- Focus variables: private investment, public investment, exchange rate regime, financial risk, foreign direct investment, capital account openness, financial crises.

### Policy-Relevant Interpretations
- Investment-led growth:
  - Strengthening private and public investment is identified as a robust channel to foster economic growth.
- Financial stability and openness:
  - Reducing financial risk can support growth, though the evidence is more limited than for investment.
  - Capital account openness intensifies the growth-dampening impact of financial crises, suggesting that policies to manage capital flow volatility and to shore up financial resilience are important when capital accounts are open.
- Exchange rate regime:
  - No strong general effect of exchange rate regime on growth across specifications.
  - Some model specifications indicate potential benefits of more flexible exchange rate regimes for growth.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/a-new-look-at-the-determinants-of-growth-in-asian-countries-43246_