The Impact of the US-China Trade Balance on the Economic Growth of Organisation of Islamic Cooperation Member Countries

Abstract

The paper aims to examine the impact of the US-China’s trade balance to the economic growth of Organization Islamic Cooperation (OIC) member countries. The data are obtained from the World Bank with 40 observation period starting from 1979 to 2018 which consists of the OIC member countries’ economic growth as dependent variable and the US-CHINA’s trade balance and exchange rate as independent variables. By adopting Non-linear Autoregressive Distributed Lag (NARDL) as the method of the study, the findings reveal that the US-China’s trade balance to the economic growth of OIC member countries have symmetric relationship. To deepen the study, the regional level analysis is also conducted to examine the unique impact in each of eight regionals of OIC member countries. The paper finds that only Southeast Asia region has the asymmetric short and long-run relationship between the US-China’s trade balance to the economic growth while others have symmetric relationship. According to the finding, the paper suggests that each region of OIC member countries must have its own policy based on either symmetric or asymmetric relationship to respond the dynamic of the US-China’s trade balance condition which will generate more benefit to the economic growth of OIC member countries.

Keywords:

Jel Code: