Will Southeast Asia be the next global manufacturing hub? A multiway cointegration, causality, and dynamic connectedness analyses.

We propose a novel framework to examine relationships among drivers of economic growth in Southeast Asia, a region poised to become a significant manufacturing destination. However, unbalanced economic growth among countries poses risks to multinational companies considering offshoring decisions. Our two-stage framework uses multi-way cointegration analysis and a vector error correction model (VECM) to investigate critical drivers of economic growth. We apply a QVAR model to evaluate dynamic connectedness and spillover effects of offshoring decisions. Using World Bank data, our results show that Southeast Asian countries are interconnected through complex relationships featuring multi-way cointegration and dynamic connectedness, informing evidence-based policy. • A conceptual framework to identify spillover effects on drivers of economic growth. • A multi-way co-integration, causality, and dynamic connectedness analysis. • A quantile vector autoregressive (QVAR) model to assess dynamic connectedness. • A subset of Southeast Asian countries have spillover effects on each other. • A sensitivity analysis of spillover effects across a sequel of quantiles. [ABSTRACT FROM AUTHOR]