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Export-led growth and structural change: evidence from Malaysia

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  • Khalid Yousif Khalafalla
  • Alan Webb
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    Abstract

    Many studies have tried to establish the causal link between export expansion and economic growth. This contribution is to recognize that structural changes will change the sources of growth and this will affect the export-growth relationship. A country case study approach is used focusing on Malaysia, a country with one of the world's highest sustained growth rates and a long history of commodity trade. We use VAR analysis of Malaysian quarterly trade and GDP growth from 1965 to 1996. Trade data are disaggregated into primary and manufactures exports and causality tests are applied to the entire period as well as two subperiods #150 the 1965 #1501980 period when policy emphasis was on import substitution and the 1981#1501996 period when policies favoured export-led growth. Statistical tests confirm export-led growth for the full period and for the period to 1980 but tests on the 1981#1501996 period show growth causing exports. Primary exports had a stronger direct impact on economic growth than manufactures. The weakening support for export-led growth after Malaysia shifted to an export-oriented development strategy is associated with structural changes associated with industrialization. Interaction among trade and growth variables becomes more complex with a broadening export base and more diverse sources of growth.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840010015066
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Applied Economics.

    Volume (Year): 33 (2001)
    Issue (Month): 13 ()
    Pages: 1703-1715

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    Handle: RePEc:taf:applec:v:33:y:2001:i:13:p:1703-1715

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    Cited by:
    1. Lee, Chin, 2013. "The Role of Macroeconomic Fundamentals in Malaysian Post Recession Growth," MPRA Paper 44808, University Library of Munich, Germany.
    2. Ann Harrison & Andrés Rodríguez-Clare, 2009. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," NBER Working Papers 15261, National Bureau of Economic Research, Inc.
    3. Hsieh, Wen-jen, 2011. "The Global Economic Recession and Industrial Structure: Evidence from Four Asian Dragons," ADBI Working Papers 315, Asian Development Bank Institute.
    4. Sato, Sumie & Fukushige, Mototsugu, 2011. "The North Korean economy: Escape from import-led growth," Journal of Asian Economics, Elsevier, vol. 22(1), pages 76-83, February.

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