GOVERNMENT SPENDING AND ECONOMIC GROWTH IN SOUTHEAST ASIAN COUNTRIES

Abstract

The study aims at examining the impacts of government spending on economic growth in five ASEAN countries including Vietnam, Thailand, Philippines, Indonesia, and Malaysia during the period between 2000 and 2016. This research employs the quantitative methodology of panel-data regression, particularly the Generalized Method of Moment (GMM) to deal with autocorrelation of residuals, problem of variance change and potential endogenous problems. The result reveals that government spending has non-linear impact on economic growth in countries under the study. More specifically, the optimal government spending for economic growth should be 23.23% percent of GDP. Accordingly, the authors suggest some policy recommendations to Vietnamese authorities in order to take advantages of positive influences of government spending on economic growth.