Economic policy uncertainties from China and investment of Southeast Asian companies

Abstract

International economic uncertainties have recently received significant attention. Researchers have been interested in economic policy uncertainties from China, in the context of Chinese economy’s strong emergence associated with possible instabilities. This paper examines the impact of China’s economic policy uncertainty on corporate investment in Southeast Asia. The sample includes 3,506 companies from six Southeast Asian countries, namely Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam during the period of 1996 – 2018. Using a fixed effect regression model for panel data, we find that uncertainty in China’s economic policies has a negative impact on investment of Southeast Asian companies. The result is robust after controlling for endogeneity.