Chapter 3: Methodology
3.3 Data
This research uses a panel data analysis to find the significant characteristics that contributed to global competitiveness in ASEAN countries. Panel data is a mix of
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cross-sectional and time-series data. It could gather more significant information, variability, and efficiency since it captures group and individual behavior.
In this research, we will use secondary data for data collection to develop the analysis, covering from 2007 to 2017, a total of 11 years period. This time range was chosen primarily due to the availability of data on the explanatory variable, GCI. Since there is incomplete time-series data on GCI scores in Brunei, Lao PDR, and Myanmar, the research will focus on the selected ASEAN countries, including Cambodia, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Data are mainly collected from the World Bank database, including GCI and independent variables, such as GDP, FDI, trade openness, and GFCF. The remaining independent variable's data sources, CCI, were collected from Worldwide Governance Indicators (WGI) database.
More information is presented below to explain the variables further.
Table 3.2: Summary of Data
Data Scale of Measurement Source of Data
GCI Index Score (1 – 7) World Bank
CCI Index Point (-2.5 – 2.5) Worldwide Governance Indicators
GDP USD ($) World Bank
FDI % World Bank
TO % World Bank
GFCF % World Bank
Source: Compiled by Author
3.3.1 Global Competitiveness Index (GCI)
GCI is a comprehensive instrument that analyses a country's competitiveness' microeconomic and macroeconomic underpinnings across 12 pillars, including
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infrastructure. (World Bank Data, n.d.) It is based on the Executive Opinion Survey, the longest-running and most comprehensive survey of its type, which reflects the perspectives of business leaders from all over the world on a wide range of topics for which data sources are limited or missing on a global scale.
(PPI Database, n.d.) The indicators are ranked from 1 to 7, where 7 is the most beneficial and 1 is the least favorable. It examines how nations achieve and maintain economic growth, as well as how competition affects each country's business.
3.3.2 Control of Corruption (CCI)
CCI is a governance indicator described by World Bank. CCI refers to the public authority or bureaucratic regulation for private advantage, resulting in corruption in the country and potential barriers to foreign investment. (IGI Global, n.d.) This is because massive corruption could result in ineffective planning for the foreign party due to the uncertainty and ambiguity it produces.
This indicator examines the extent to which public authority is utilized for personal benefit, including petty and grand corruption, as well as "state capture"
by elites and economic interests. (World Bank Data, n.d) In other words, it analyses the robustness and efficacy of a country's anti-corruption policies and institutional system to eliminate corruption. (MCC, n.d.)
3.3.3 Gross Domestic Product (GDP)
GDP is the monetary value of all finished goods and services produced inside a country during a specific period. (Worldometer, n.d.) The indicator gives an economic overview of a country and calculates the size and rate of growth of an economy. Its primary purpose is to assess a country's financial sustainability.
In other words, it allows policymakers and central banks to determine whether
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the economy is contracting or expanding and take immediate actions. (Callen, 2020) Using the income approach, GDP can be estimated utilizing the expenditures approach as the total spending in the economy or as the income earned on total production. (Khan Academy, n.d.) In fact, it commonly expresses a country's wealth.
3.3.4 Foreign Direct Investment (FDI)
FDI flows are measured in US dollars and as a percentage of GDP. (OECD Data, n.d.) It is an investment in the business interests of another nation undertaken by a firm or investor in one country. (OECD iLibrary, n.d.) In general, FDI happens when an investor establishes international business transactions or purchases foreign business assets in a foreign firm. FDI could be categorized into two terms, whereby inflows and outflows. The value of investors' equity and net loans to home country firms in foreign economies is referred to as the outflow FDI. While inflow FDI, on the other hand, represented the value of foreign investors' equity and net loans to companies based in the reporting economy. In fact, FDI is crucial because it will have a long-term influence on expanding the host country's integration with the global economy, which will result in greater imports and exports. (OECD, n.d.)
3.3.5 Trade Openness
Trade openness refers to the economic orientation of a country within the context of international trade. (IGI Global, n.d.) Trade openness is one measure of a country's engagement in the global trade system. The actual magnitude of an economy's recorded imports and exports measures its degree of openness.
(Alotaibi & Mishra, 2014) Trade openness, it is said, delivers several economic benefits, including more excellent technology transfer, skills transfer, higher
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labor, total factor productivity, and economic growth and development. As a result, it is essential to develop local firms' market possibilities, enhance productivity, and encourage innovation through competition.
(EconomicsOnline, 2021) Hence, it is relevant to act as an independent variable to examine competitiveness.
3.3.6 Gross Fixed Capital Formation (GFCF)
GFCF is the sum of resident producers' investments in fixed assets after subtracting disposals during a specific time. (National Institute of Statistics and Economic Studies, n.d.) It also covers various non-produced asset value enhancements that producers or institutional units realize. The fixed assets could be either tangible or non-tangible, implying that the goods have been used regularly or continuously for more than a year. (Eurostat, n.d.) It includes the firm's permanent assets, such as buildings and equipment, which are not intended to be disposed of by the firm. It is viewed as the key that has the potential to stimulate economic growth as it is the largest component of domestic investment in terms of macroeconomic policy. (BYJUS, 2021)