Has East Asian Growth Benefited from Spatial Externality Transmitted from the Near Economic Center?

To explore the mechanism underlying income convergence in East Asia, this study applies spatial econometrics to investigate growth spillovers that spread from a regional or near economic center to neighboring countries. Estimation results show that East Asian growth benefited from a near economic center through spatial externality that caused income convergence in the region. However, spatial externality became weaker, and convergence slowed in the total Asian sample. The study suggests that spatial externality is a key feature of East Asian growth, in which many countries developed their own economies by interacting with leading economies in the region.