Key Drivers of Growth in Promoting Economic Growth Amid the Middle-Income Trap Challenges in ASEAN

This study examines the effects of trade openness, interest rates, exchange rates, fiscal policy, the digital economy, and political stability on economic growth in middle-income ASEAN countries amid the challenges of the middle-income trap. Using a quantitative explanatory design, the study analyzes panel data from Indonesia, Malaysia, and Thailand over the 2014–2023 period. Secondary data were obtained from the World Development Indicators and Worldwide Governance Indicators and analyzed using panel data regression. The fixed effects model results show that trade openness has a positive and statistically significant effect on economic growth, whereas interest rates and fiscal policy have significant negative effects. Exchange rates, the digital economy, and political stability do not have statistically significant effects at the 5% significance level. Simultaneously, the six independent variables significantly explain variations in economic growth, with an adjusted coefficient of determination of 0.6753. These findings highlight the importance of international trade integration, manageable financing costs, and effective government expenditure in supporting economic growth. Addressing the middle-income trap requires not only expanding economic activity but also improving productivity, resource allocation, and the effectiveness of growth-enhancing policies.