The relationship between urbanization and economic growth: An empirical study on ASEAN countries

Purpose This study examines the relationship between urbanization and economic growth in ASEAN countries for the period from 1993 to 2014. Design/methodology/approach The Granger causality test, the regression estimation method with static and dynamic panel data (FE, RE, Driscoll and Kraay, D-GMM, PMG) were used. The sample includes seven ASEAN countries: Brunei, Cambodia, Indonesia, Malaysia, Philippines, Thailand and Vietnam. Findings The results show that between urbanization and economic growth at least a causal relationship exists. And the results show that urbanization positively impacts economic growth. However, the relationship between urbanization and economic growth is non-linear. The urbanization reaches a threshold after which it may impede economic growth. The estimated threshold is 69.99% for the static model and 67.94% for the dynamic model. Research limitations/implications The evidence from this study suggests that there is nonlinear relationship between urbanization and economic growth. ...