  The COVID-19 pandemic has compelled multinational corporations to diversify
their global supply chain risk and to relocate their factories to Southeast
Asian countries beyond China. Such recent phenomena provide a good opportunity
to understand the factors that influenced offshore decisions in the last two
decades. We propose a new conceptual framework based on econometric approaches
to examine the relationships between these factors. Firstly, the Vector Auto
Regression (VAR) for multi-way cointegration analysis by a Johansen test as
well as the embedding Granger causality analysis to examine offshore
decisions--innovation, technology readiness, infrastructure, foreign direct
investment (FDI), and intermediate imports. Secondly, a Quantile Vector
Autoregressive (QVAR) model is used to assess the dynamic connectedness among
Southeast Asian countries based on the offshore factors. This study explores a
system-wide experiment to evaluate the spillover effects of offshore decisions.
It reports a comprehensive analysis using time-series data collected from the
World Bank. The results of the cointegration, causality, and dynamic
connectedness analyses show that a subset of Southeast Asian countries have
spillover effects on each other. These countries present a multi-way
cointegration and dynamic connectedness relationship. The study contributes to
policymaking by providing a data-driven innovative approach through a new
conceptual framework.
