The Impact of Trade Openness on Economic Growth in ASEAN-5 Countries

Hue, Jia Huey (2026) The Impact of Trade Openness on Economic Growth in ASEAN-5 Countries. Final Year Project (Bachelor), Tunku Abdul Rahman University of Management and Technology.

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Abstract

This study examines the impact of trade openness on economic growth in ASEAN-5 countries, Malaysia, Indonesia, Singapore, Thailand, and the Philippines from 1990 to 2023 using the Autoregressive Distributed Lag (ARDL) approach to capture short- and long-run dynamics across countries. In the short run, openness produces mixed effects: Indonesia, Thailand, and the Philippines benefit from access to imported capital goods, export expansion, and productivity gains, while Malaysia faces negative growth due to adjustment costs, and Singapore experiences contraction from exposure to global demand shocks. Long-term effects are more consistent: openness promotes growth in Indonesia, the Philippines, and Malaysia through competitiveness, technology transfer, and global integration, whereas Singapore shows diminishing returns and Thailand exhibits insignificant effects due to structural and institutional constraints. These findings suggest that trade openness alone does not guarantee growth; its benefits depend on domestic factors such as institutional quality, macroeconomic stability, and structural resilience. The study recommends policies to strengthen ASEAN trade integration, attract productive foreign investment, maintain economic and exchange rate stability, and embed inclusivity and sustainability, enabling ASEAN-5 countries to transform trade liberalization into a resilient driver of long-term development