Luận văn thạc sĩ UEH does global financial crisis impact on east asian export

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UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES

HO CHIMINHCITY THE HAGUE

VIETNAM THE NETHERLANDS

VIETNAM - NETHERLANDS

PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

DOES GLOBAL FINANCIAL CRISIS IMPACT ON

EAST ASIAN EXPORT?

BY

TRAN PHAM HOAI TRINH

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

HO CHI MINH CITY, May 2014

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UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES

HO CHIMINHCITY THE HAGUE

VIETNAM THE NETHERLANDS

VIETNAM - NETHERLANDS

PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

DOES GLOBAL FINANCIAL CRISIS

IMPACT ONEAST ASIAN EXPORT?

A thesis submitted in partial fulfilment of the requirements for the degree of

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

By

TRAN PHAM HOAI TRINH

Academic Supervisor:

Dr. DINH CONG KHAI

HO CHI MINH CITY, May 2014

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ACKNOWLEDGEMENT

I would like to take this opportunities to send my special thanks to Dr.

Nguyen Trong Hoai who has inspired initiatives and passion of global financial

crisis to me to carry out this interesting study; my sincere gratitude to Dr. Dinh

Cong Khai for his scientific guidance and invaluable advices, which he has

provided throughout the time of preparation and accomplishment of this paper; my

thanks to my classmates Anh Thu, Thu Huong, Thuy Thanh and my loved

daughters Moon and May who always give me their restless assistance and

encouragement when I was in trouble.

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ABSTRACT

The global financial crisis in 2008 was initially a single crisis in the US

subprime market. After very short time, the crisis has quickly escalated and spread

its impact to all over the world. As stated by UNDP, very quickly through

international trade, the crisis has been transmitted from the West to the East. This

paper aims to find out how this financial crisis impacts the trade of East Asian

countries. More particularly, this paper tries to find out how, and to what extent,

does the global financial crisis impact exports of East Asia. By studying the

impacts of GDP, financial sector quality (measured by domestic credit), import

demand on exports and by observing the change of these impacts before and after

the global financial crisis, the effect of the global financial crisis on export will be

identified. Data of exports, domestic credits and import demands are collected from

2001 to 2010 for 8 countries in East Asia. The data is balanced from country to

country, then balanced panel data will be used for model testing. Moreover, the

Hausman test used to test the panel data is significant with fixed effect model. The

results finally show that the global financial crisis started in 2008 has not changed

impact’s magnitudes of GDP, financial sector quality and imports demand on

exports of East Asia during crisis.

Key words: global financial crisis, international production fragmentation,

triangular trade network, financial integration.

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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION......................................................................................9

1.1 BACKGROUND OF THE STUDY ...............................................................................9

1.2 PROBLEM STATEMENT ...........................................................................................10

1.3 RESEARCH OBJECTIVES .........................................................................................10

1.4 RESEARCH QUESTIONS...........................................................................................11

1.5 RESEARCH METHODOLOGY..................................................................................11

1.6 OUTLINE OF STRUCTURE .......................................................................................11

CHAPTER 2: LITERATURE REVIEW........................................................................13

2.1 LITERATURE REVIEW & EMPIRICAL STUDIES..................................................13

*Impact of economic growth on exports.............................................................................15

*Impact of financial sector quality on exports....................................................................16

*Impact of import demand on exports ................................................................................17

2.2CONCEPTUAL FRAMEWORK ..................................................................................21

CHAPTER 3: OVERVIEW of EAST ASIAN EXPORTS and FINANCIAL SYSTEM

.............................................................................................................................................22

3.1 EAST ASIAN EXPORTS.............................................................................................22

3.2 EAST ASIAN FINANCIAL SYSTEM ........................................................................26

CHAPTER 4: ECONOMETRIC MODEL and ESTIMATION STRATEGY ...........29

4.1 ECONOMETRIC MODEL...........................................................................................29

4.2 ESTIMATION STRATEGY.........................................................................................31

4.3 DATA............................................................................................................................32

CHAPTER 5: ECONOMETRIC RESULTS and FINDINGS DISCUSSION ............36

5.1 DESCRIPTIVE STATISTIC ........................................................................................36

5.2 VARIABLES and CORRELATION MATRIX............................................................43

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5.3 EMPIRICAL RESULTS and FINDINGS DISCUSSION ............................................44

CHAPTER 6: POLICY IMPLICATIONS and CONCLUSION..................................50

6.1 POLICY IMPLICATIONS ...........................................................................................50

6.2 CONCLUSION ............................................................................................................52

6.3 LIMITATION ..............................................................................................................53

REFERENCES..................................................................................................................55

APPENDIX ........................................................................................................................59

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