International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss


Economic Growth, Political Freedom and Human Development: China, Indonesia and Malaysia
Fazleen Abdul Fatah, Nasuddin Othman, Shamsiah Abdullah

This paper aims at analyzing the main elements of successful performance in economic growth among developing nations in East Asia particularly China, Indonesia and Malaysia. The approach however does not identify all the variables and indicators that are attributable to economic growth across these countries, rather it is an attempt to discern which factors are the most critical and imperative that illuminate the differences between fast and slow growing economies. There are three dimension of explanatory variables that have been categorized as the determinants of economic growth; (1) demographic variable (life expectancy at birth); (2) policy variables (openness to trade, civil liberties and political rights, foreign direct investment (FDI) and (3) human development indicator which can be explained by fertility rate. Real GDP per capita, on the other hand is used as a proxy variable to measure economic growth. Data were collected for three East Asian countries including China, Indonesia and Malaysia from 1980-2005. Using a least square quantitative method, our findings suggest that life expectancy, foreign direct investment, openness and political freedom have positive influences and statistically significant determinants of growth in China, Indonesia and Malaysia during 1980-2005. The result also shows that fertility rate and civil liberty are positively related to economic growth, but have no significant effects on these developing nations. In the concluding section, we demonstrate several important elements that have accelerated economic growth in each country. FDI and civil liberties are the major significant determinants of growth in China while the persistence of high fertility rate and greater openness are found to be significantly stimulating GDP in Indonesia. Malaysia, on the other hand, is performing well in both political freedom and civil liberty.

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