Lucky Countries? Internal and External Sources of Southeast Asian Growth

For several decades, the economies of Southeast Asia have experienced average per capita GDP growth rates second only to China, and much higher than any other major world region. In this study we examine the sources of this growth. We ask whether countries of this region follow a common growth path relative to the rest of the developing world. We pay particular attention to two prominent features of virtually every Asian regional growth narrative--openness to international trade and factor flows, and spillovers from growth booms in large regional economies like Japan and China--which have not received adequate attention in previous quantitative growth analyses. Our results show that rapid income growth in Northeast Asia had significant spillover effects on Southeast Asian growth, and that these effects were significantly larger than for other developing regions. But within the region, growth outcomes have been differentiated in part by the degree of openness to international trade and factor flows. Thus, while the good luck of geographic proximity to the booming economies of Northeast Asia has been important, good policies also matter.