The Impact of GDP Growth, Foreign Direct Investment, and the Real Exchange Rate on Imports of Goods and Services in ASEAN-3 Countries

Abstract

This study examines the long-run and short-run effects of real GDP growth, foreign direct investment, and the real exchange rate on imports of goods and services in three ASEAN economies Indonesia, Malaysia, and Thailand using annual panel data from 1990 to 2024. The analysis employs the Panel ARDL Pooled Mean Group (PMG) estimator to capture dynamic adjustments across countries with different short-run structures. Unit root tests confirm that the variables are integrated of mixed orders, I(0) and I(1), supporting the use of the ARDL framework. Cointegration tests indicate a stable long-run relationship among the variables, suggesting that import behavior is driven by fundamental macroeconomic factors. The long-run results show that only the real exchange rate significantly influences imports, with appreciation reducing import demand, while GDP growth and FDI exhibit no significant long-run effects. In the short run, GDP growth significantly increases imports, whereas the exchange rate and the error-correction term are insignificant. Overall, the findings highlight the dominant role of exchange rate competitiveness in the long-run import dynamics of ASEAN-3 countries, while economic growth primarily affects short-run fluctuations. These results provide important policy implications for exchange rate management and trade stabilization strategies.