Export determinants and its long-run relationship of Malaysia's major export sectors
Many empirical studies have tried to establish the causal link between export expansion and economic growth, due to the view that structural changes in a nation will alter the sources of growth, which in turn will affect the export-oriented strategy that can be used. The main purpose of this stud...
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| Main Author: | |
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| Format: | Thesis |
| Language: | English |
| Published: |
2005
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| Subjects: | |
| Online Access: | http://psasir.upm.edu.my/id/eprint/85023/1/FEP%202005%2015%20ir.pdf http://psasir.upm.edu.my/id/eprint/85023/ |
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| Summary: | Many empirical studies have tried to establish the causal link between export
expansion and economic growth, due to the view that structural changes in a nation will
alter the sources of growth, which in turn will affect the export-oriented strategy that can
be used. The main purpose of this study is to explore the long run convergence of
Malaysia's three main export sectors; namely agriculture, manufacturing and services
sector, and the determinants of export expansion, by using the cointegration framework.
Using annual data for 1960-2002, this paper explores a model in which growth of exports
is determined by a combination of human capital, research and development adoption,
labor productivity, labor wage rate, real effective exchange rate, imports of capital and
intermediate goods as well as gross domestic product or GDP. The results show that the
growth of exports of each sector and their respective export determinants were
cointegrated, implying that there exists a steady-state relationship between the series. The
results of the vector error-correction model or VECM also indicate that in the long run,
the hypothesis that GDP-driven exports and imports Granger-causes growth of exports
cannot be rejected at the 5% significance level, as for the case of agriculture and
manufacturing sector. For the services sector, the hypothesis that productivity-led export
and human capital Granger-cause services export also cannot be rejected, indicating a
long run relationship between growth of exports and labor productivity as well as
development of human capital. The weakening support for export-led growth after
Malaysia shifted to an export-oriented development strategy is associated with structural
changes associated with industrialization. |
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