MURC 2019, 24th - 25th June 2019, Yangon
A STUDY ON THE ECONOMIC GROWTH AND SOME SOCIO- ECONOMIC FACTORS FOR
CLMV COUNTRIES
Daw Yin Mon Thant
Department of Statistics
Co-operative University, Sagaing
yinmonthant2017@gmail.com
Abstract - This paper is aimed to compare and analyze the
economic growth and some socio-economic factors for
Cambodia, Lao, Myanmar and Vietnam (CLMV) countries.
CLMV has a unique position in the regional value chains in
Southeast Asia region. This study used secondary data from
world data bank and study period lasted from year 2008 to
year 2017. Descriptive analysis is used to make the
comparative analysis of the economic growth and some socio-
economic factors for CLMV countries. Panel regression
analysis method is applied to analyze the effect of health,
education and economic factors of CLMV countries. Gross
domestic product GDP (purchasing power parity) per capita
is the highest in Lao and the lowest in Cambodia. The life
expectancy at birth of Vietnam is the highest and that of
Myanmar is the lowest. Vietnam has the highest
unemployment rate and mean years of schooling. Cambodia
has the lowest unemployment rate and mean years of
schooling among the CLMV countries. The fixed effect model
is more appropriate for this study in panel regression model
by using the Hausman test and also the Breusch Pagan
Lagrangian multiplier test. Life expectancy at birth and
mean years of schooling have positive effect on GDP (PPP)
per capita. The unemployment rate has a negative effect on
GDP (PPP) per capita. The overall model is statistically
significant at 1% level for fixed effect model. So, life
expectancy at birth and mean years of schooling are
dramatically increased, GDP (PPP) per capita can be more
attractive by the countries. However, the higher
unemployment rate can reduce to attract the GDP (PPP) per
capita. High unemployment rate makes the management of
social issues more difficult. Therefore, it needs to be
considered as the most effective and efficient scheme in socio-
economic development for CLMV countries up to now.
Keywords - GDP (PPP) per capita, Socio-economic Factors,
Panel Regression Model, CLMV countries
I. INTRODUCTION
The development of not only a country but also an
association depends on the health, education and some
socio-economics factors. Therefore, Association of
Southeast Asian Nations (ASEAN) Leaders had organized
as CLMV countries by Cambodia, Lao People’s
Democratic Republic, Myanmar and Vietnam to narrow
the development gap, to promote the economic growth and
regional stability between ASEAN's older and newer
members in November 2000. Within the ASEAN region,
the CLMV countries have begun attracting greater
attention of the global economic community, given their
huge potential for future development. CLMV aims to
promote collaboration among the member nations
including goods and services, investments and skilled labor
and socio-economic condition across the region. It needs to
be increased and developed not only the gross domestic
product of a country but also economic, social, political,
and security cooperation of a country [1]. Human
development achievements for a country are decent
standard of living measured by GDP (purchasing power
parity), a long and healthy life measured by the lifetime of
the birth and knowledge measured by education literacy
[1,2]. As unemployment is the macroeconomic problem,
full employment should be a major macroeconomic goal
of any government because it maximizes output [3]. So
this paper analyses the GDP (PPP) per capita, life
expectancy at birth, mean years of schooling and
unemployment rate of CLMV countries.
A. Objectives of the study
The objectives of the study are to make the
comparative analysis of health, education and economic
factors of CLMV countries and to analyze the economic
growth and some socio-economic factors for CLMV
countries.
B. Scope and Limitations of the Study
The study area focuses on CLMV member countries,
namely Cambodia, Lao PDR, Myanmar, and Vietnam. The
main sources of the secondary data are world development
indicators, and world data bank. Study period is from year
2008 to year 2017 at constant price as 2011.
C. Methods of Study
Descriptive analysis is used to make the comparative
analysis of the life expectancy at birth in health, mean
years of schooling in education and unemployment rate in
socio-economic factors of CLMV countries. Panel
regression analysis method is applied to analyze the effect
of health, education and socio-economic factors of CLMV
countries.
II. LITERATURE REVIEWS
Gross domestic product (PPP) per capita is one of the
most widely used measures of an economy's output or
production. The two most common methods to convert
GDP (PPP) per capita into a common currency are
nominal and purchasing power parity (PPP). GDP (PPP)
per capita is widely used by economists to measure the
condition of an economy, as its variations are relatively
quickly identified (Samuelson and Nordhaus, 1989) [3].
A study covering 92 countries from 1960 to 1990 by
Mazumdar (2000) and Zaman et al. (2009) concluded that
life expectancy has a significant negative effect on GDP
(PPP) per capita in the short-run and a non-significant
positive impact in the long-run. Malley, Molana (2001)
and Led Sinclair (2004) founded that the movements
indicated that GDP (PPP) per capita and unemployment
rate were more strongly linked [4].
Life expectancy at birth is defined as how long, on
average, a newborn can expect to live, if current death rate
does not change. Ranis and Stewart (2005), Gupta and
Mitra (2004), Acemoglu and Johnson (2007), Biggs et al.
(2010) also found that GDP (PPP) per capita had
significant effect of life expectancy due to increasing
poverty [5,6].
The unemployment rate is one of the most closely
watched statistics because a rising rate indicates a weak
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MURC 2019, 24th - 25th June 2019, Yangon
economy. The unemployment rate is the share of the labor
force that is jobless, expressed as a percentage. Villaverde
Maza (2009) and Zaleha et al. (2007) analyzed Okun’s
law for the Spanish regions over the period 1980-2004 and
Malaysian economy. They found that an inverse
relationship between unemployment and output holds for
most of the regions and for the whole country.
Education plays main role in the determination of
growth (Schultz, 1961). It performs an important role in
formation of human capital. It has been found that well
educated human capital has consistent and strongest direct
and positive effect on productivity, prosperity, development
and economic growth of a country (Shah, 2011). Schultz
(1963) and Williams(1967)found that raising the education
level of the labor was a major contribution to growth both
in developing and developed countries[7,8,9].
III. THEORETICAL BACKGROUND OF PANEL
DATA REGRESSION MODEL
D. Panel Data
Panel data are the combination of time series and
cross-sectional data. The model of panel data techniques
was originated by Gauss (1809) and Legendre (1805)
George Biddell Airy(1861). Panel data analysis grew into
its maturity with the first conference on panel data
econometrics in August 1977 in Paris, organized by Pascal
Mazodier. Then, the field has witnessed expanding
activities in both methodological and applied research. A
panel data set contains n entitles or subject (firms and
states), each of which includes T observations measured at
l through t time period. Thus, the total number of
observations is nT. Ideally, panel data are measured at
regular time intervals (year, quarter, and months) [10,11].
E. Panel Data Regression Models
The regression models based on the panel data are
called panel data regression models. Panel data models
examine group (individual-specific) effect, time effects or
both. These effects are either fixed effect or random effect.
The General Panel Data Regression Model is:
= + + i = 1, 2,.., N , t = 1, 2,.,T (3)
Where,
i = individual dimension , t = time dimension
= the response of individual i at time t
= the unobserved individual-specific, time invariant
intercepts
= the explanatory variable i at a time t
= regression coefficient of random variable
= the error term of individual i at time t
F. Fixed Effect (Within) Model (FEM)
Fixed effects model is a statistical model in which
the model parameters are fixed or non-random quantities.
The fixed effects models can be written as;
= + + + + (3.1)
Where,
i = 1, 2, . . ., n , t = 1, 2, . . ., T
i = subject and t = time period for the variables
Equation (3.1) is known as the fixed effects
(regression) model (FEM). The team "Fixed effects" is due
to the fact that, although the intercept may differ across
subjects, each entity's intercept does not vary over time,
that is, it is time-invariant. The fixed effect model
examines difference in intercepts, assuming the same
slopes and constant variance across entities or subjects.
Since a group (individual specific) effect is time invariant
and considered a part of the intercept, ui is allowed to be
correlated to other regression [11, 12,13].
G. Random Effect Model (REM)
A random effects model, also called a variance
components model, is a statistical model where the model
parameters are random variables. The random effects
models can be written as;
= + + + + (3.2)
Where,
i = 1, 2, . . .,n , t = 1, 2, . . ., T
i = subject and t = time period for the variables
The other name of random effect model is called
error component model (ECM) because the composite
error term consists of two (or more) error components.
H. Model Assumptions
The following assumptions are made on model
Equation (3),
1) Linearity
2) Independence
3) Strict Exogeneity
4) Error Variance
I. Hausman Test and Breusch-Pagan Lagrange
Multiplier Test
1) Hausman Test
The Hausman specification test compares the
fixed versus random effects under the null hypothesis that
the individual effects are uncorrelated with the other
regressors in the model [Hausman (1978)]. If correlated
(H0 is rejected), a random effect model produces biased
estimates, violating one of the Gauss-Markov
assumptions; so a fixed effect model is preferred.
Hausman's essential result is that the covariance of an
efficient estimator with its difference from an efficient
estimator is zero [Greene (2003)]. Hausman test is a good
way to choose which model is better for the researchers to
decide between fixed or random effects by running a
Hausman test where the null hypothesis is that the
preferred model is random effects vs, the alternative the
fixed effects. The test statistic developed by Hausman test
has an asymptotic Chi-square distribution [13,14].
2) Breusch-Pagan Lagrange Multiplier Test
To identify which model is appropriate either the
pooled ordinary least square ( O L S ) or the panel random
effect model, the Breusch-Pagan Lagrange multiplier (LM)
test is used. In statistics, the Breusch- Pagan test, developed
in1979 by Trevor Breusch and Adrian Pagan, is used to test
for heteroskedasticity in a linear regression model. When
the result of the variance of the errors from a regression is
dependent on the values of the independent variables,
heteroskedasticity is present. The decision to choose
between the pooled OLS and the panel random effect
model depends on the probability of chi-squared of the LM
test [12, 13].
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MURC 2019, 24th - 25th June 2019, Yangon

IV. ANALYSIS FOR CLMV COUNTRIES In Figure (3), it can be found that the Vietnam has the
highest unemployment rate among the CLMV Countries
J. GDP (PPP) per capita in CLMV Countries from 2008 to 2017 but after 2010 unemployment rate of
The following Figure (1) shows GDP (PPP) per Vietnam was decreased. As Royal Government of
capita from 2008 to 2017, at 2011 as constant price in Cambodia (RGC) always pays attention to the promotion
CLMV countries. of investment in Cambodia in order to create work
opportunities for people, Cambodia has the lowest
4000 5000 6000

unemployment rate in CLMV Countries. The

GDP (per capita USD)

unemployment rates of Myanmar and Lao PDR have

between 0.6 percent and 1 percent. After year 2012, the
3000

unemployment rate of Vietnam was slightly increased

among CLMV Countries.
2000

2008 2010 2012 Year 2014 2016 2018

Cambodia Lao
Myanmar Vietnam M. Mean Years of Schooling in CLMV Countries
Source: World Bank Data Mean years of schooling in CLMV Countries from
Figure 1. GDP (PPP) per capita In CLMV Countries 2008 to 2017 are described in Figure (4).
According to the Figure (1), GDP (PPP) per capita of

8
Lao PDR and Vietnam are between 3500 US$ and 6500

MYS(percent)
7
US $ each, that of Myanmar is between US$ 3000 and

6
5500 US$, GDP (PPP) of Cambodia is between US$ 2500

5
and US$ 4000, and these countries are no more than the

4
GDP (PPP) per capita of US$ 10000 among in CLMV 2008 2010 2012 2014 2016 2018
Year
Countries. It can be observed that of CLMV Countries Cambodia
Myanmar
Lao
Vietnam
increased in year by year. After year 2012, the GDP (PPP)
per capita of Lao PDR has more than that of Vietnam. Lao Source: World Bank Data
Figure 4. Mean Years of Schooling in CLMV Countries
PDR has the highest GDP (PPP) per capita and Cambodia
Mean years of schooling in CLMV Countries from
has the lowest GDP (PPP) per capita among in CLMV
2008 to 2017 are described in Figure (4). It can be found
Countries.
that the Vietnam has the highest mean years of schooling
K. Life Expectancy at Birth in CLMV Countries and Cambodia has the lowest mean years of schooling
The following Figure (2) shows life expectancy at among in CLMV Countries. The mean years of schooling
birth in CLMV Countries. are increased year by year during 2008 to 2017 in Lao
PDR and Myanmar. Mean years of schooling in Vietnam
75

and Cambodia are decreased in 2010. In Vietnam, mean

LEAB (age)

years of schooling are slightly decreased in 2014 and then

70

increased in up to now.
65

N. Panel Data Regression Model for CLMV Countries

60

2008 2010 2012 Year 2014 2016 2018

Cambodia
Myanmar
Lao
Vietnam
The explained variable is GDP (PPP) per capita and
the three explanatory variables are some socio-economic
Source: World Bank Data
Figure 2. Life Expectancy at Birth in CLMV Countries
factors; life expectancy at birth, unemployment rate,
According to the Figure (2), it can be found that the means years of schooling.
life expectancy at birth of Vietnam has the highest among O. The fixed Effect Model for CLMV Countries
the CLMV Countries and the life expectancy at birth of all A fixed effect model examines differences in
CLMV Countries are slightly increasing year by year intercepts, assuming the same slopes and constant variance
during 2008 to 2018 except Myanmar. Life expectancy at across countries. Since individual specific effect is time
birth of Myanmar was slightly decreased from 2016 to
invariant and considered a part of the intercept, is
2017. Life expectancy at birth of Lao PDR was slightly
allowed to be correlated to other regressors. The fixed
increased than Myanmar at that time.
effect model is
L. Unemployment Rate in CLMV Countries = + + + +
Unemployment rate of CLMV Countries are where,
described in Figure (3). i = 1, 2,..,4 , t = 1, 2, …,10
β1 = Intercept
2.5

GDP = GDP (PPP) per capita

2
UER (percent)

β2 = Slope of Life Expectancy at Birth

1.5

LEAB = Life Expectancy at Birth

1

β3 = Slope of Unemployment Rate

.5

UER = Unemployment Rate

0

2008 2010 2012 Year 2014 2016 2018

β4 = Slope of Mean Years of Schooling
Cambodia Lao
Myanmar Vietnam MYS = Mean Years of Schooling
Source: World Bank Data The following Table (I) presents the fixed effect
Figure 3. Unemployment rate in CLMV Countries model for CLMV Countries.

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MURC 2019, 24th - 25th June 2019, Yangon
TABLE I. THE FIXED EFFECT MODEL FOR CLMV COUNTRIES significant level, p-value is 1.0000. Therefore, the panel
Variables Coefficient Std. error t P-value fixed effect model is found to be appropriate [14].
Constant -26210.6 6425.97 -4.08 0.000***
LEAB 397.04 112.14 3.54 0.001*** TABLE I I I THE RESULTS OF BREUSCH PAGAN L.M TEST
UER -368.33 391.26 -0.94 0.003*** Variable Variance Std. deviation = sqt(Var)
MYS 680.14 312.42 2.18 0.037** GDP(PPP) 12381 1112.69
e 122727.9 350.33
Sigma u 2505.3687
µ 0 0
Sigma e 350.3254 Chi bar square 0.0000
Rho 0.9808 Prob > chi square 1.0000
F(3,33) 43.35 Source: STATA output
P-value 0.0000 Based on the results of these two tests, the fixed
Number of groups 4 effect model is appropriate and it should be implemented.
Number of time(year) 10
Number of observations 40 Q. Testing for the Assumptions
Source: STATA output
***,**,* statistically significant at 1% level , 5% and 10% level. To determine the violation of required assumption
In the fixed effect model, all variables are statistically from panel data regression model, the following procedures
significant. Life expectancy at birth, unemployment rate have been used.
and mean years of schooling are statistically significant at 1) Testing for Normality
5 percent level, given the fact the probability values The following Figure (5) shows the histogram for
(0.000, 0.003, 0.037) is smaller than 0.05. The estimated residual plot for the GDP of CLMV countries.
fixed effect is
-26210.6+397.0418 -368.3252
+680.1419
From the above equation, it is found that life
expectancy at birth and means year schooling have
positive effects on GDP which is theoretically justified.
Unemployment rate has negative effect on GDP (PPP). Figure 5. Histogram for Residual
If life expectancy at birth rises by one year, GDP One of the basic assumptions is that disturbances are
(PPP) per capita will increase by 397.04 US$. Therefore, normally distributed with zero mean and constant
it can be concluded that GDP (PPP) per capita growth rate variance. To check whether the disturbances are normally
increases, life expectancy at birth will be increased. distributed, histogram and Normal Q-Q plot of the
Similarly means years of schooling rises by one year, GDP disturbances can be constructed. The histogram in Figure
(PPP) per capita will increase by 680.14 US$. So, means (5) appears to be pile fashioned. Figure (6) shows Normal
years of schooling increases, GDP (PPP) per capita will Q-Q plot for CLMV countries.
be increased. It is found that when unemployment rate
rises by 1 percent, GDP (PPP) per capita will reduce by
368.33 US$. Therefore, it can be concluded that if
unemployment rate increases, GDP (PPP) per capita will
be decreased. The overall model is also statistically
significant at 1% level. The intercept -26210.6 is the
average of four CLMV Countries.
P. Testing Results Figure 6. Normal Q-Q Plot of Regression Residuals
Similarly, the normal probability plot is virtually a
1) Hausman Test
straight line. According to histogram and Normal Q-Q
The results of Hausman test are shown in Table (II). plot, it can be concluded that the normality assumption
TABLE II. THE RESULTS OF THE HAUSMAN TEST appears to be generally reasonable.
Variable Coefficients (b-B) Std.
(b) FEM (B) REM Difference Error
2) Testing for the presence of heteroscedasticity
LEAB 397.04 -465.07 862.12 83.76
problem
UER -368.33 -924.30 555.98 177.44
MYS 680.14 2122.01 -1441.87 100.384
These two figures are error plots. The basic
chi square 105.90 assumption of the multiple regression model is
Prob>chi2 0.0000 homoscedasticity.
Source: STATA output
According to the result of the Hausman test, Table
(2) shows that the significant level, p-value 0.0000 is less
than 1 percent level. It means that the null hypothesis is
rejected. It can be concluded that the fixed effect
estimation is more appropriate than the random effects
estimation.
2) Breusch Pagan Lagrangian Multiplier Test Figure 7. Residual Pattern for Heteroscedasticity
The results are shown in table (3). The panel This figure (7) shows that heteroscedasticity appears
random effect model is rejected because that the to be absent because there is no pattern between residual
and estimated value. In short, residual pattern in Figure (7)

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MURC 2019, 24th - 25th June 2019, Yangon
tells that the homoscedasticity or equal variance may exist
the error term for regression model of the gross domestic
product for CLMV countries.
3) Testing for the presence of autocorrelation
(random effect model)
Figure (8) depicts error patterns that can reveal
information about the model by plotting et and et-1.
Figure 8. The relationship residual plots and time scatter plot
This figure shows that positive or negative
autocorrelation is absent. Because there is no pattern in
residual plot, two variables i.e, residual and pervious
residual are not correlated. Therefore, the less fallible
procedure is needed to determine whether the residuals are
auto-correlated or not. So, model assumptions are
appropriate and satisfying.
V. CONCLUSION
R. Findings
Among the CLMV Countries, Lao PDR and Vietnam
are the highest US$ of GDP (PPP) per capita and
Cambodia is the lowest US $ of GDP (PPP) per capita at
2011, constant price. The life expectancy at birth of
Vietnam is the highest and Lao PDR and Myanmar are the
lowest. Unemployment rate of Vietnam is the highest and
that of Cambodia has the lowest. Because of Royal
Government of Cambodia (RGC) always pays attention to
the promotion of investment in Cambodia in order to
create work opportunities for people. Vietnam has the
highest mean years of schooling and Cambodia has the
lowest value of mean years of schooling. Therefore,
Vietnam and Lao PDR cover the quality of institutions,
infrastructure, health and education, macroeconomic
factors except unemployment rate of Vietnam is a little
higher and GDP (PPP) per capita of Lao PDR is the
lowest. Cambodia and Myanmar are now reforming to
improve the country's economic landscape and prospects,
education and health.
Fixed effect model is more appropriate for this study,
by using Hausman test and also the Breusch Pagan
Lagrangian multiplier test. The overall model is
statistically significant at 1% level for fixed effect model.
It has been found that the coefficient of life expectancy at
birth and the coefficient of mean years of schooling are
positive effect on GDP (PPP) per capita. The coefficient of
unemployment rate is a negative effect on GDP (PPP) per
capita.
S. Suggestions
The high GDP (PPP) per capita, life expectancy at
birth and mean years of schooling in the host country
indicates a high level of health and socioeconomic
condition. Life expectancy at birth and mean years of
schooling have more increased, GDP (PPP) per capita can
be more attractive for the good of country. As the higher
unemployment rate can reduce to attract the GDP (PPP)
per capita, there is need to be changed in social and
political development, generating huge employment
opportunities for the local population. It also needs to
minimize the unemployment rate by making the job
opportunities and maximize the foreign investors and
sharing the techniques among the developing CLMV
Countries. In addition, there is also a need to promote
education, create employment opportunities and promote
healthcare in remote areas in that country, according the
declaration w h i c h showed strong commitment to
strengthen and enhance cooperation and promote
regional integration. It is the government’s responsibility
in providing the best ways to the people in these countries.
Therefore, people must be striving mightly together
with their government for getting success socio-economic
progress social sector investment: health, education,
environmental impact and social safety network.
There by contributing to overall development of
nations in the region of CLMV Countries, CLMV
Countries will have to enjoy abundant natural resources
and labor force wages while risking challenges in
infrastructure development and logistics.
ACKNOWLEDGMENT
I would like to offer my deep gratitude special thanks
to Professor Dr. Moe Moe Ye, Rector, Co-operative
University, Sagaing, for her giving kindly encourage and
valuable guidance. I wish to express my heartfelt thanks to
retired Daw Khin Aye Myint, (Professor), Head of
Department of Statistics, Co-operative University, Sagaing
for her giving ideas and suggestions. I am also very
thankful to all my colleagues at the Department of
Statistics for their kind cooperation.
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