Asia in Crisis- Repairing the Cracks of the Shock

摘要

The global economic crisis led to a decline in the economic growth of developed and developing countries. I hypothesize that the vulnerability increases with the number and size of linkages with other foreign markets. This study apply a GMM dynamic heterogeneous panel model along with a Random Effects GLS model to examine the relationship between economic growth and crisis through two external channels, international trade and foreign capital inflows, on a sample of selected Asian countries over the two crisis periods 1997-2000 and 2008-2011. The main finding is that foreign capital and exchange rates during crises have negative impact on economic growth, while export earnings have a positive effect.