# Analysis of Oil Price Effect on Economic Growth of ASEAN Net Oil Exporters

^{*}

## Abstract

**:**

## 1. Introduction

## 2. Literature Review

## 3. Results

#### 3.1. Empirical Model

_{t}represents the white noise residuals.

^{2}to λ

^{5}normalise on λ

^{1}for Equation (3). However, the long-run estimates are meaningful only if cointegration can be established. There are three separate tests to establish the existence of cointegration among the variables, namely, the F-test for joint significance of lagged variables and the t-test on the lagged level of the dependent variable as suggested by Pesaran et al. [52] and another additional F-test on the lagged levels of the independent variable(s) as suggested by McNown et al. [54].

#### 3.2. Data and Sources

## 4. Empirical Results

#### 4.1. Unit Root Tests

#### 4.2. ARDL Results: Linear Model

^{2}value is reported to determine the goodness of fit, which in this case is good for all three countries. To determine whether the short-run and long-run coefficient estimates are stable, the CUSUM and CUSUM

^{2}are utilised following Pesaran et al. [52]. For all three countries, the estimates are stable for both CUSUM and CUSUM

^{2}, which is unsurprising given that the inclusion of a dummy variable, to account for the structural break, would lead to a stable estimate. Among the three countries being studied, the dummy variable is only significant for Brunei, which means that the exclusion of a dummy variable for Brunei will lead to a biased result and the CUSUM or CUSUM

^{2}test might be unstable. Surprisingly, despite the Zivot and Andrews [58] unit root tests indicating the existence of a structural break, both the ARDL model for Malaysia and Vietnam do not suffer from any structural break.

#### 4.3. ARDL Results: Nonlinear Model

^{2}, suggesting goodness of fit. CUSUM and CUSUM

^{2}results suggest the estimates are stable within the 5% confidence band for Brunei and Malaysia. For the case of Vietnam, the parameters are stable for CUSUM but unstable for the CUSUM

^{2}test. Furthermore, the RAMSEY reset test indicates misspecification error for the case of Vietnam only.

## 5. Conclusions and Policy Implications

## Author Contributions

## Funding

## Acknowledgments

## Conflicts of Interest

## References

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Year | Brunei | Cambodia | Indonesia | Laos | Malaysia | Myanmar | Philippines | Singapore | Thailand | Vietnam |
---|---|---|---|---|---|---|---|---|---|---|

2002 | 187.9 | 0 | 277.9 | 0 | 232.6 | −6.9 | −250.1 | −816.4 | −682.2 | 322.1 |

2003 | 196.0 | 0 | 192.1 | 0 | 235.6 | 0.6 | −238.8 | −938.2 | −709.1 | 337.0 |

2004 | 186.5 | 0 | 103.3 | 0 | 217.7 | 0.0 | −189.6 | −1114.3 | −815.7 | 388.6 |

2005 | 196.0 | 0 | 81.5 | 0 | 212.2 | 6.3 | −199.7 | −1176.8 | −762.1 | 369.7 |

2006 | 196.9 | 0 | −7.5 | 0 | 188.0 | 2.2 | −202.0 | −1150.1 | −763.9 | 340.2 |

2007 | 171.2 | 0 | 56.5 | 0 | 144.7 | 2.9 | −189.0 | −1162.5 | −752.2 | 328.9 |

2008 | 163.9 | 0 | 46.1 | 0 | 126.1 | 0.8 | −172.5 | −1158.0 | −765.7 | 308.0 |

2009 | 141.9 | 0 | 46.5 | 0 | 158.3 | 0.9 | −117.0 | −871.8 | −762.3 | 296.6 |

2010 | 147.6 | 0 | 76.1 | 0 | 164.0 | 0.0 | −165.0 | −944.0 | −786.2 | 216.6 |

2011 | 135.4 | 0 | 96.2 | 0 | 49.9 | −0.1 | −171.5 | −973.9 | −761.7 | 182.4 |

2012 | 139.0 | 0 | 61.5 | 0 | 27.1 | 2.7 | −162.5 | −966.2 | −819.2 | 183.0 |

2013 | 117.0 | 0 | 6.8 | 0 | 47.1 | 2.7 | −140.1 | −939.8 | −843.2 | 165.7 |

2014 | 107.6 | 0 | −40.8 | 0 | 38.6 | 2.8 | −160.0 | −942.0 | −798.2 | 180.6 |

2015 | 115.5 | 0 | −69.8 | 0 | 150.4 | 1.8 | −197.9 | −977.9 | −818.3 | 183.6 |

2016 | 109.7 | 0 | −61.8 | 0 | 192.5 | 2.7 | −222.1 | −1029.9 | −842.2 | 148.9 |

Cointegration Test | Null Hypothesis | Alternative Hypothesis |
---|---|---|

F-bound test | ${\lambda}_{1}={\lambda}_{2}={\lambda}_{3}={\lambda}_{4}={\lambda}_{5}=0$ | $any{\lambda}_{1},{\lambda}_{2},{\lambda}_{3},{\lambda}_{4},{\lambda}_{5}\ne 0$ |

t-test on lagged dependent variable | ${\lambda}_{1}=0$ | ${\lambda}_{1}\ne 0$ |

F-test on lagged independent variable | ${\lambda}_{2}={\lambda}_{3}={\lambda}_{4}={\lambda}_{5}=0$ | $any{\lambda}_{2},{\lambda}_{3},{\lambda}_{4},{\lambda}_{5}\ne 0$ |

Outcome | F-Bound Test | t-Test on Lagged Dependent Variable | F-Test on Lagged Independent Variable | Conclusion |
---|---|---|---|---|

1 | ✓ | ✗ | ✓ | Not cointegrated (Degenerate case #1) |

2 | ✓ | ✓ | ✗ | Not cointegrated (Degenerate case #2) |

3 | ✗ | Not necessary | Not necessary | Not cointegrated |

4 | ✓ | ✓ | ✓ | Cointegrated |

Variables | Descriptions | Measurement | Sources | Expected Sign |
---|---|---|---|---|

GDPPC | Real Gross Domestic Product Per Capita | Constant US Dollar 2010 | UNSD, WDI | |

BRENT | Brent crude oil price (USD/Barrel) | Constant US Dollar 2010 | WBC | + |

LE | Life Expectancy | Years | WDI | + |

POP | Total Population | Total number | WDI | − |

GFCF | Gross Fixed Capital Formation | Constant US Dollar 2010 | UNSD | + |

Variable | Mean | Min | Max | Std. Dev |
---|---|---|---|---|

Brunei | ||||

GDPPC | 39,588.59 | 31,430.74 | 72,437.55 | 8,450.31 |

BRENT | 47.34 | 15.48 | 101.58 | 26.19 |

LE | 74.38 | 69.94 | 77.37 | 2.31 |

POP | 313,146.36 | 187,656.00 | 428,697.00 | 74,438.09 |

GFCF | 2.80 × 10^{9} | 9.23 × 10^{8} | 6.39 × 10^{9} | 1.40 × 10^{9} |

Malaysia | ||||

GDPPC | 6,673.06 | 3,194.60 | 11,528.34 | 2,481.98 |

BRENT | 47.34 | 15.48 | 101.58 | 26.19 |

LE | 72.07 | 67.73 | 75.45 | 2.23 |

POP | 22,179,506.21 | 13,460,201.00 | 31,624,264.00 | 5,634,228.05 |

GFCF | 4.09 × 10^{10} | 9.12 × 10^{9} | 9.27 × 10^{10} | 2.39 × 10^{10} |

Vietnam | ||||

GDPPC | 817.49 | 309.52 | 1,834.65 | 462.11 |

BRENT | 47.34 | 15.48 | 101.58 | 26.19 |

LE | 72.35 | 66.88 | 76.45 | 2.79 |

POP | 76,286,359.77 | 53,169,673.00 | 95,540,800.00 | 12,601,992.94 |

GFCF | 1.67 × 10^{10} | 1.39 × 10^{9} | 5.42 × 10^{10} | 1.59 × 10^{10} |

Variable | Mean | Min | Max | Std. Dev |
---|---|---|---|---|

Brunei | ||||

LnGDPPC | 10.57 | 10.36 | 11.19 | 0.18 |

LnBRENT | 3.71 | 2.74 | 4.62 | 0.57 |

LnLE | 4.31 | 4.25 | 4.35 | 0.03 |

LnPOP | 12.62 | 12.14 | 12.97 | 0.25 |

LnGFCF | 21.63 | 20.64 | 22.58 | 0.51 |

Malaysia | ||||

LnGDPPC | 8.73 | 8.07 | 9.35 | 0.39 |

LnBRENT | 3.71 | 2.74 | 4.62 | 0.57 |

LnLE | 4.28 | 4.22 | 4.32 | 0.03 |

LnPOP | 16.88 | 16.42 | 17.27 | 0.26 |

LnGFCF | 24.24 | 22.93 | 25.25 | 0.67 |

Vietnam | ||||

LnGDPPC | 6.55 | 5.74 | 7.51 | 0.57 |

LnBRENT | 3.71 | 2.74 | 4.62 | 0.57 |

LnLE | 4.28 | 4.20 | 4.34 | 0.04 |

LnPOP | 18.14 | 17.79 | 18.38 | 0.17 |

LnGFCF | 22.92 | 21.05 | 24.72 | 1.26 |

Variable | LnGDPPC | LnBRENT | LnLE | LnPOP | LnGFCF |
---|---|---|---|---|---|

Brunei | |||||

LnGDPPC | 1.000 | ||||

LnBRENT | −0.062 | 1.000 | |||

LnLE | −0.833 *** | 0.370 ** | 1.000 | ||

LnPOP | −0.833 *** | 0.374 ** | 0.998 *** | 1.000 | |

LnGFCF | −0.793 *** | 0.172 | 0.831 *** | 0.846 *** | 1.000 |

Malaysia | |||||

LnGDPPC | 1.000 | ||||

LnBRENT | 0.429 *** | 1.000 | |||

LnLE | 0.988 *** | 0.365 ** | 1.000 | ||

LnPOP | 0.992 *** | 0.420 *** | 0.997 *** | 1.000 | |

LnGFCF | 0.969 *** | 0.329 ** | 0.945 *** | 0.941 *** | 1.000 |

Vietnam | |||||

LnGDPPC | 1.000 | ||||

LnBRENT | 0.540 *** | 1.000 | |||

LnLE | 0.975 *** | 0.384 ** | 1.000 | ||

LnPOP | 0.961 *** | 0.329 ** | 0.998 *** | 1.000 | |

LnGFCF | 0.984 *** | 0.459 *** | 0.986 *** | 0.978 *** | 1.000 |

**Table 8.**Zivot and Andrews [49]’s breakpoint unit root test results.

Variable | Level Variables | First Differenced Variables | ||||
---|---|---|---|---|---|---|

Model A | Model B | Model C | Model A | Model B | Model C | |

Brunei | ||||||

LnGDPCC | −5.75(0) ^{a} [1986] | −4.52(0) ^{b} [2011] | −4.87(0) ^{c} [1986] | −6.07(0) ^{a} [1987] | −6.59(0) ^{a} [1992] | −6.49(0) ^{a} [1991] |

LnBRENT | −3.12(0) [1986] | −2.95(0) [1987] | −3.21(0) [1986] | −6.61(0) ^{a} [2009] | −6.69(0) ^{a} [2006] | −6.99(0) ^{a} [1999] |

LnLE | 0.41(2) [2005] | −3.73(2) [2002] | −3.71(2) [2001] | −6.89(2) ^{a} [2005] | −4.39(2) ^{a} [2002] | −5.51(2) ^{b} [2005] |

LnPOP | −3.15(2) [2003] | −5.20(2) ^{a} [1998] | −5.19(2) ^{b} [1998] | −2.52(2) [2002] | −1.66(2) [2008] | −2.64(2) [2002] |

LnGFCF | −4.34(0) [1999] | −2.63(0) [1992] | −4.51(0) [1999] | −7.34(0) ^{a} [1997] | −6.35(0) ^{a} [2000] | −7.22(0) ^{a} [1997] |

Malaysia | ||||||

LnGDPCC | −3.46(0) [1991] | −2.54(0) [1996] | −3.40(0) [1991] | −6.35(0) ^{a} [1998] | −5.16(0) ^{a} [1992] | −6.31(0) ^{a} [1998] |

LnBRENT | −3.12(0) [1986] | −2.95(0) [1987] | −3.21(0) [1986] | −6.61(0) ^{a} [2009] | −6.69(0) ^{a} [2006] | −6.99(0) ^{a} [1999] |

LnLE | −9.42(2) [2001] | −4.85(2) ^{b} [1993] | −4.66(2) [1990] | −3.36(2) [2008] | −6.00(2) ^{a} [2005] | −6.83(2) ^{a} [2001] |

LnPOP | −0.78(2) [1991] | −5.17(2) ^{a} [1994] | −4.70(2) [1992] | −5.84(2) ^{a} [1999] | −4.84(2) ^{b} [2011] | −5.11(2) ^{b} [2009] |

LnGFCF | −3.64(1) [2001] | −3.25(1) [1995] | −4.25(1) [1998] | −5.08(0) ^{b} [1998] | −4.28(0) ^{c} [1999] | −5.01(0) ^{c} [1998] |

Vietnam | ||||||

LnGDPCC | −3.40(2) [2000] | −4.91(2) ^{b} [1987] | −3.69(2) [1989] | −8.34(0) ^{a} [1992] | −5.95(0) ^{a} [2004] | −8.15(0) ^{a} [1992] |

LnBRENT | −3.12(0) [1986] | −2.95(0) [1987] | −3.21(0) [1986] | −6.61(0) ^{a} [2009] | −6.69(0) ^{a} [2006] | −6.99(0) ^{a} [1999] |

LnLE | −7.39(2) ^{a} [2002] | −7.11(2) ^{a} [1997] | −6.83(2) ^{a} [1996] | −2.78(2) [2011] | −4.12(2) ^{c} [2008] | −3.67(2) ^{a} [2008] |

LnPOP | −3.06(2) [1987] | −6.55(2) ^{a} [1992] | −5.20(2) ^{b} [1991] | −3.65(2) ^{b} [1993] | −3.96(2) [2002] | −3.57(2) [1998] |

LnGFCF | −5.34(0) ^{b} [1992] | −2.89(0) [2004] | −5.09(0) ^{b} [1992] | −9.73(0) ^{a} [1990] | −7.92(0) ^{a} [1994] | −9.55(0) ^{a} [1990] |

^{a},

^{b}, and

^{c}corresponds to 1%, 5%, and 10% significance level respectively. The 1%, 5% and 10% critical values: −5.34, −4.80 and −4.58 for Model A; −4.93, −4.42 and −4.11 for Model B; and −5.57, −5.08 and −4.82 for Model C.

**Table 9.**Linear autoregressive distributed lag model (ARDL) estimation results and diagnostic checks.

Variable | Country | ||
---|---|---|---|

Brunei | Malaysia | Vietnam | |

Panel A: Coefficient estimates of linear ARDL | |||

Selected model | (1, 1, 2, 2, 2) | (1, 1, 0, 1, 2) | (3, 0, 0, 0, 0) |

Constant | −56.32(15.80) ^{a} | 2.40(5.86) | −0.19(2.74) |

LnGDPPC_{t−1} | −0.98(0.08) ^{a} | −0.52(0.13) ^{a} | −0.04(0.03) |

LnBRENT_{t−1} | −0.03(0.02) | −0.01(0.01) | 0.004(0.01) |

LnLE_{t−1} | 26.40(5.88) ^{a} | −3.69(2.74) | −0.20(2.41) |

LnPOP_{t−1} | −3.62(0.79) ^{a} | 0.90(0.38) ^{b} | 0.05(0.43) |

LnGFCF_{t−1} | −0.05(0.03) | 0.12(0.03) ^{a} | 0.02(0.02) |

∆LnGDPPC_{t−1} | 0.56(0.17) ^{a} | ||

∆LnGDPPC_{t−2} | −0.26(0.11) ^{b} | ||

∆LnBRENT_{t} | −0.01(0.02) | 0.02(0.01) | 0.004(0.01) |

∆LnLE_{t} | 153.90(46.23) ^{a} | −3.69(2.74) | −0.20(2.41) |

∆LnLE_{t−1} | −206.89(48.57) ^{a} | ||

∆LnPOP_{t} | −44.53(10.75) ^{a} | −3.20(1.74) ^{c} | 0.05(0.43) |

∆LnPOP_{t−1} | 44.71(10.03) ^{a} | ||

∆LnGFCF_{t} | 0.03(0.02) | 0.17(0.03) ^{a} | 0.02(0.02) |

∆LnGFCF_{t−1} | 0.04(0.02) ^{c} | −0.06(0.02) ^{a} | |

DUMMY | −0.20(0.02) ^{a} | −0.02(0.02) | 0.01(0.01) |

Panel B: Diagnostic results | |||

ECT_{t−1} | −0.98(0.07) ^{a} | −0.52(0.09) ^{a} | −0.04(0.02) ^{b} |

Adj. R^{2} | 0.981 | 0.999 | 0.999 |

LM(2) | 3.77 | 4.00 | 0.82 |

RESET test | 0.52 | 0.39 | 14.28 ^{a} |

CUSUM (CUSUM^{2}) | S(S) | S(S) | S(S) |

F-statistic (overall) | 38.65 | 5.58 | 0.99 |

t-statistic (lagged DV) | −11.65 | −4.08 | - |

F-statistic (lagged IDV) | 11.18 | 6.00 | - |

^{a},

^{b}and

^{c}indicates 1%, 5%, and 10% significance level, respectively. The number in parenthesis shows the standard error for the respective coefficient. LM is the Breusch–Godfrey serial correlation test with the number of lags as stated in parenthesis. RESET test is Ramsey’s reset test for misspecification of model. For CUSUM and CUSUM

^{2}, S stands for stable, and U stands for unstable.

Cointegration Test | 10% | 5% | 1% | |||
---|---|---|---|---|---|---|

I(0) | I(1) | I(0) | I(1) | I(0) | I(1) | |

F-statistic (overall) | 2.696 | 3.898 | 3.276 | 4.630 | 4.590 | 6.368 |

t-statistic (lagged DV) | −2.570 | −3.660 | −2.860 | −3.990 | −3.430 | −4.600 |

F-statistic (lagged IDV) | 2.14 | 3.82 | 2.70 | 4.67 | 4.03 | 6.63 |

Variable | Country | ||
---|---|---|---|

Brunei | Malaysia | Vietnam | |

LnBRENT | −0.03(0.02) | −0.02(0.02) | 0.09(0.15) |

LnLE | 26.90(6.14) ^{a} | −7.15(5.13) | −4.57(55.62) |

LnPOP | −3.69(0.80) ^{a} | 1.75(0.63) ^{b} | 1.16(10.01) |

LnGFCF | −0.05(0.03) | 0.23(0.03) ^{a} | 0.41(0.50) |

^{a},

^{b}and

^{c}indicates 1%, 5%, and 10% significance level, respectively. The number in parenthesis shows the standard error for the respective coefficient.

Variable | Country | ||
---|---|---|---|

Brunei | Malaysia | Vietnam | |

Panel A: Coefficient estimates of nonlinear ARDL | |||

Selected Model | (4, 0, 0, 0, 0, 0) | (1, 0, 0, 0, 0, 0) | (3, 0, 0, 0, 0, 0) |

Constant | −6.80 (7.79) | 3.30(6.58) | 1.26(3.39) |

LnGDPPC_{t−1} | −0.68(0.10) ^{a} | −0.72(0.08) ^{a} | −0.07(0.04) ^{c} |

POS_{t−1} | −0.01(0.01) | 0.001(0.02) | 0.01(0.01) |

NEG_{t−1} | 0.10(0.03) ^{a} | 0.01(0.02) | −0.003(0.01) |

LnLE_{t−1} | −3.97(2.96) | −5.52(2.95) ^{c} | −1.03(2.35) |

LnPOP_{t−1} | −0.24(0.45) | 1.34(0.42) ^{a} | 0.16(0.41) |

LnGFCF_{t−1} | 0.003(0.02) | 0.16(0.02) ^{a} | 0.03(0.02) ^{b} |

∆LnGDPPC_{t−1} | 0.10(0.12) | 0.64(0.18) ^{a} | |

∆LnGDPPC_{t−2} | −0.15(0.08) ^{c} | −0.26(0.11) ^{b} | |

∆LnGDPPC_{t−3} | −0.13(0.08) | ||

∆POS_{t} | −0.01(0.01) | 0.001(0.02) | 0.01(0.01) |

∆NEG_{t} | 0.10(0.03) ^{a} | 0.01(0.02) | −0.003(0.01) |

∆LnLE_{t} | −3.97(2.96) | −5.52(2.95) ^{c} | −1.03(2.35) |

∆LnPOP_{t} | −0.24(0.45) | 1.34(0.42) ^{a} | 0.16(0.41) |

∆LnGFCF_{t} | 0.003(0.02) | 0.16(0.02) ^{a} | 0.03(0.02) ^{b} |

DUMMY | −0.08(0.03) ^{a} | ||

Panel B: Diagnostic results | |||

ECT_{t−1} | −0.68(0.07) ^{a} | −0.72(0.06) ^{a} | −0.07(0.01) ^{a} |

SUM POS SR | −0.01(0.01) | 0.001(0.02) | 0.01(0.01) |

SUM NEG SR | 0.10(0.03) ^{a} | 0.01(0.02) | −0.003(0.01) |

W_{LR} | −0.11(0.03) ^{a} | −0.01(0.03) | 0.01(0.02) |

W_{SR} | −0.11(0.03) ^{a} | −0.01(0.03) | 0.01(0.02) |

Adj. R^{2} | 0.967 | 0.998 | 0.999 |

LM(1) | 4.26 | 2.53 | 1.89 |

RESET test | 0.28 | 2.39 | 14.78 ^{a} |

CUSUM (CUSUM^{2}) | S(S) | S(S) | U(S) |

F-statistic (overall) | 11.40 | 17.83 | 3.27 |

t-statistic (lagged DV) | −6.95 | −11.14 | - |

F-statistic (lagged IDV) | 8.18 | 21.08 | - |

^{a},

^{b}and

^{c}indicates 1%, 5%, and 10% significance level respectively. The number in parenthesis shows the standard error for the respective coefficient. W

_{LR}is the Wald test of long-run symmetry, and W

_{SR}is the Wald test of short-run symmetry. LM is the Breusch–Godfrey serial correlation test with the number of lags as stated in parenthesis. RESET test is Ramsey’s reset test for misspecification of model. For CUSUM and CUSUM

^{2}, S stands for stable and U stands for unstable.

Variable | Country | ||
---|---|---|---|

Brunei | Malaysia | Vietnam | |

POS | −0.02(0.02) | 0.001(0.02) | 0.14(0.15) |

NEG | 0.14(0.04) ^{a} | 0.01(0.03) | −0.05(0.17) |

LnLE | 5.83(4.42) | −7.68(3.92) ^{c} | −14.12(36.22) |

LnPOP | −0.35(0.66) | 1.87(0.50) ^{a} | 2.16(6.38) |

LnGFCF | 0.01(0.02) | 0.22(0.02) ^{a} | 0.47(0.32) |

^{a},

^{b}and

^{c}indicates 1%, 5%, and 10% significance level respectively. The number in parenthesis shows the standard error for the respective coefficient.

© 2019 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).

## Share and Cite

**MDPI and ACS Style**

Kriskkumar, K.; Naseem, N.A.M.
Analysis of Oil Price Effect on Economic Growth of ASEAN Net Oil Exporters. *Energies* **2019**, *12*, 3343.
https://doi.org/10.3390/en12173343

**AMA Style**

Kriskkumar K, Naseem NAM.
Analysis of Oil Price Effect on Economic Growth of ASEAN Net Oil Exporters. *Energies*. 2019; 12(17):3343.
https://doi.org/10.3390/en12173343

**Chicago/Turabian Style**

Kriskkumar, Karunanithi, and Niaz Ahmad Mohd Naseem.
2019. "Analysis of Oil Price Effect on Economic Growth of ASEAN Net Oil Exporters" *Energies* 12, no. 17: 3343.
https://doi.org/10.3390/en12173343