IDEAS home Printed from https://ideas.repec.org/a/ukm/jlekon/v55y2021i1p51-69.html
   My bibliography  Save this article

Dynamics of Malaysia’s Bilateral Export Post Covid-19: A Gravity Model Analysis

Author

Listed:
  • Zainuddin, Muhamad Rias K V

    (Fakulti Perniagaan Ekonomi dan Pembangunan Sosial Universiti Malaysia Terengganu 21030 Kuala Nerus, Terengganu MALAYSIA)

  • Shukor, Md Shafiin

    (Fakulti Ekonomi dan Pengurusan Universiti Kebangsaan Malaysia 43600 Bangi, Selangor MALAYSIA)

  • Zulkifli, Muhamad Solehuddin

    (Fakulti Pengurusan dan Perniagaan, Universiti Teknologi Mara Cawangan Terengganu, 23000 Dungun, Terengganu MALAYSIA)

  • Abdullah, Amirul Hamza

    (Institut Masa Depan Malaysia 192, Jalan Ara, Bukit Bandaraya 59100 Kuala Lumpur MALAYSIA)

Abstract

The recent pandemic outbreak has distorted international trade flows as the global economic activity reaches a nearstandstill due to stricter movement control imposed by most countries worldwide. Despite gaining the researcher’s attention, the impact of Covid-19 on trade performances are still relatively understudied. Hence, this study aims to analyse the impact of the Covid-19 pandemic outbreak on the bilateral sectoral export for Malaysia. This study employs Poisson Pseudo Maximum Likelihood (PPML) regressions to analyse the sectoral impact in gravity models. The findings provide new perspectives on the varying impacts of the current pandemic outbreak on sectoral trade performances. The dummy variables that represent the existence of Covid-19 have significantly reduced bilateral exports for 11 sectors while increased the exports for seven sectors. Meanwhile, the severity of the Covid-19 outbreak (measured by the number of new cases and death cases) in Malaysia has negative impacts on 14 sectors. The reason for this is that when the current pandemic outbreak in Malaysia is more severe, the government has to enforce stricter movement controls that affect productions and reduce exports. On the other hand, the severity of the Covid-19 outbreak in trading partners has positive impacts on the export for 13 sectors in Malaysia. This is because the more severe pandemic outbreak in trading nations causes lower production capacities and thus higher dependence on imported goods. Differences between the impact of Covid-19 existence and severity by sectors should serve as a red flag for Malaysia’s policymakers to take immediate actions to minimise the impact of the ongoing pandemic outbreak and maximise gains from sectors that have higher demand post Covid-19. The net negative impact on the export performance further reiterates the need for government intervention policies to ensure domestic firms can withstand the current tide, which then minimises the social and economic impacts and helps the economy to recover.

Suggested Citation

  • Zainuddin, Muhamad Rias K V & Shukor, Md Shafiin & Zulkifli, Muhamad Solehuddin & Abdullah, Amirul Hamza, 2021. "Dynamics of Malaysia’s Bilateral Export Post Covid-19: A Gravity Model Analysis," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 55(1), pages 51-69.
    • Handle: RePEc:ukm:jlekon:v:55:y:2021:i:1:p:51-69
    DOI: http://dx.doi.org/10.17576/JEM-2021-5501-4
    as

    Download full text from publisher

    File URL: http://www.ukm.my/jem/wp-content/uploads/2021/06/jeko_551-4.pdf
    Download Restriction: no
    File URL: https://libkey.io/http://dx.doi.org/10.17576/JEM-2021-5501-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Yumei Zhang & Xinshen Diao & Kevin Z. Chen & Sherman Robinson & Shenggen Fan, 2020. "Impact of COVID-19 on China's macroeconomy and agri-food system – an economy-wide multiplier model analysis," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 12(3), pages 387-407, July.
    2. Martijn Burger & Frank van Oort & Gert-Jan Linders, 2009. "On the Specification of the Gravity Model of Trade: Zeros, Excess Zeros and Zero-inflated Estimation," Spatial Economic Analysis, Taylor & Francis Journals, vol. 4(2), pages 167-190.
    3. John E. Ataguba, 2020. "COVID-19 Pandemic, a War to be Won: Understanding its Economic Implications for Africa," Applied Health Economics and Health Policy, Springer, vol. 18(3), pages 325-328, June.
    4. Yumei Zhang & Xinshen Diao & Kevin Z. Chen & Sherman Robinson & Shenggen Fan, 2020. "Impact of COVID-19 on China's macroeconomy and agri-food system – an economy-wide multiplier model analysis," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 12(3), pages 387-407, July.
    5. Raza, Werner G. & Grumiller, Jan & Taylor, Lance & Tröster, Bernhard & von Arnim, Rudi, 2014. "ASSESS_TTIP: Assessing the claimed benefits of the Transatlantic Trade and Investment Partnership (TTIP)," Research Reports 1/2014, Austrian Foundation for Development Research (ÖFSE).
    6. Lilik Sugiharti & Rudi Purwono & Miguel Angel Esquivias Padilla, 2020. "Analysis of determinants of Indonesian agricultural exports," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(4), pages 2676-2695, June.
    7. Hayakawa, Kazunobu & Mukunoki, Hiroshi, 2020. "Impacts of covid-19 on international trade : evidence from the first quarter of 2020," IDE Discussion Papers 791, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    8. Timothy J. Kehoe & Pau S. Pujolàs & Jack Rossbach, 2017. "Quantitative Trade Models: Developments and Challenges," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 295-325, September.
    9. Mayer, Thierry & Zignago, Soledad, 2006. "Notes on CEPII’s distances measures," MPRA Paper 26469, University Library of Munich, Germany.
    10. Khac Hieu Nguyen & Thi Thu Tra Pham, 2020. "Long-term impact of natural disasters on Vietnamese income per capita: the case of typhoon Durian," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(1), pages 590-603, September.
    11. Lin Sun & Michael R. Reed, 2010. "Impacts of Free Trade Agreements on Agricultural Trade Creation and Trade Diversion," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(5), pages 1351-1363.
    12. Gary Gereffi, 2020. "What does the COVID-19 pandemic teach us about global value chains? The case of medical supplies," Journal of International Business Policy, Palgrave Macmillan, vol. 3(3), pages 287-301, September.
    13. Selena Begoviæ & Sead Kreso, 2017. "The adverse effect of real effective exchange ratechange on trade balance in European transition countries," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 35(1), pages 277-299.
    14. Yubin Wang & Jingjing Wang & Xiaoyang Wang, 2020. "COVID-19, supply chain disruption and China’s hog market: a dynamic analysis," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 12(3), pages 427-443, June.
    15. Nasrullah, Muhammad & Chang, Liu & Khan, Khalid & Rizwanullah, Muhammad & Zulfiqar, Farah & Ishfaq, Muhammad, 2020. "Determinants of forest product group trade by gravity model approach: A case study of China," Forest Policy and Economics, Elsevier, vol. 113(C).
    16. Lugovskyy, Volodymyr & Skiba, Alexandre, 2016. "Positive and negative effects of distance on export prices," Journal of Economic Behavior & Organization, Elsevier, vol. 127(C), pages 155-181.
    17. Ender Demir & Mehmet Huseyin Bilgin & Gokhan Karabulut & Asli Cansin Doker, 2020. "The relationship between cryptocurrencies and COVID-19 pandemic," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(3), pages 349-360, September.
    18. Paul Krugman, 1997. "Development, Geography, and Economic Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 026261135x, December.
    19. Robert C. Feenstra & James R. Markusen & Andrew K. Rose, 2001. "Using the gravity equation to differentiate among alternative theories of trade," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 34(2), pages 430-447, May.
    20. Goodell, John W. & Huynh, Toan Luu Duc, 2020. "Did Congress trade ahead? Considering the reaction of US industries to COVID-19," Finance Research Letters, Elsevier, vol. 36(C).
    21. Grumiller, Jan-Augustin, 2014. "Ex-ante versus ex-post assessments of the economic benefits of Free Trade Agreements: Lessons from the North American Free Trade Agreement (NAFTA)," Briefing Papers 10, Austrian Foundation for Development Research (ÖFSE).
    22. Robert Lundmark, 2018. "Analysis and projection of global iron ore trade: a panel data gravity model approach," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 191-202, May.
    23. Gert-Jan M. Linders, 2005. "Distance Decay in International Trade Patterns - a Meta-analysis," ERSA conference papers ersa05p679, European Regional Science Association.
    24. Dirk Ehnts & Michael Paetz, 2021. "COVID-19 and its economic consequences for the Euro Area," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(2), pages 227-249, June.
    25. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-623, June.
    26. Ashraf, Badar Nadeem, 2020. "Economic impact of government interventions during the COVID-19 pandemic: International evidence from financial markets," Journal of Behavioral and Experimental Finance, Elsevier, vol. 27(C).
    27. Raza, Werner & Grumiller, Jan & Taylor, Lance & Tröster, Bernhard & von Arnim, Rudi, 2014. "ASSESS_TTIP: Assessing the claimed benefits of the Transatlantic Trade and Investment Partnership," Policy Notes 10/2014, Austrian Foundation for Development Research (ÖFSE).
    28. Jungho Baek & Yoon Jung Choi, 2020. "Do oil price changes really matter to the trade balance? Evidence from Korea‐ASEAN commodity trade data," Australian Economic Papers, Wiley Blackwell, vol. 59(3), pages 250-278, September.
    29. James E. Anderson, 2011. "The Gravity Model," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 133-160, September.
    30. Ana P. Fernandes & Heiwai Tang, 2020. "How Did the 2003 SARS Epidemic Shape Chinese Trade?," CESifo Working Paper Series 8312, CESifo.
    31. Richard Barichello, 2020. "The COVID‐19 pandemic: Anticipating its effects on Canada's agricultural trade," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 68(2), pages 219-224, June.
    32. Muhamad Rias K. V. Zainuddin & Tamat Sarmidi & Norlin Khalid, 2020. "Sustainable Production, Non-Tariff Measures, and Trade Performance in RCEP Countries," Sustainability, MDPI, vol. 12(23), pages 1-12, November.
    33. Howard Davies & David Green, 2010. "Banking on the Future: The Fall and Rise of Central Banking," Economics Books, Princeton University Press, edition 1, number 9154.
    34. Yubin Wang & Jingjing Wang & Xiaoyang Wang, 2020. "COVID-19, supply chain disruption and China’s hog market: a dynamic analysis," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 12(3), pages 427-443, June.
    35. Ghani, Gairuzazmi M. & Sofyan, Joel Faruk, 2014. "Trade Variety and Export Performance of ASEAN-5," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 48(1), pages 49-61.
    36. C. T. Vidya & K. P. Prabheesh, 2020. "Implications of COVID-19 Pandemic on the Global Trade Networks," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2408-2421, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Suhas Jadhav & Ishita Ghosh, 2024. "Future Prospects of the Gravity Model of Trade: A Bibliometric Review (1993–2021)," Foreign Trade Review, , vol. 59(1), pages 26-61, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    2. repec:hal:wpspec:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    3. repec:hal:spmain:info:hdl:2441/dambferfb7dfprc9m01g1j1k2 is not listed on IDEAS
    4. Martin Grančay & Nóra Grančay & Jana Drutarovská & Ladislav Mura, 2015. "Gravitačný model zahraničného obchodu českej a slovenskej republiky 1995-2012: ako sa zmenili determinanty obchodu? [Gravity Model of Trade of the Czech and Slovak Republics 1995-2012: How Have Det," Politická ekonomie, Prague University of Economics and Business, vol. 2015(6), pages 759-777.
    5. Bo Xiong & Sixia Chen, 2014. "Estimating gravity equation models in the presence of sample selection and heteroscedasticity," Applied Economics, Taylor & Francis Journals, vol. 46(24), pages 2993-3003, August.
    6. Robert Lundmark, 2018. "Analysis and projection of global iron ore trade: a panel data gravity model approach," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 191-202, May.
    7. Schaak, Henning, 2015. "The Impact of Free Trade Agreements on International Agricultural Trade: A Gravity Application on the Dairy Product Trade and the ASEAN-China-FTA," 55th Annual Conference, Giessen, Germany, September 23-25, 2015 211619, German Association of Agricultural Economists (GEWISOLA).
    8. Claudio Candia Campano & Medardo Aguirre González & Lilliam Antón López & Javier Beltrán Valdebenito, 2018. "A gravity model of trade for Nicaraguan agricultural exports," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 37(74), pages 391-428, July.
    9. Anderson, James E. & Yotov, Yoto V., 2020. "Short run gravity," Journal of International Economics, Elsevier, vol. 126(C).
    10. Drivas, Kyriakos & Economidou, Claire & Karamanis, Dimitrios & Sanders, Mark, 2020. "Mobility of highly skilled individuals and local innovation activity," Technological Forecasting and Social Change, Elsevier, vol. 158(C).
    11. Felix Groba, 2014. "Determinants of trade with solar energy technology components: evidence on the porter hypothesis?," Applied Economics, Taylor & Francis Journals, vol. 46(5), pages 503-526, February.
    12. Anderson, James E. & Borchert, Ingo & Mattoo, Aaditya & Yotov, Yoto V., 2018. "Dark costs, missing data: Shedding some light on services trade," European Economic Review, Elsevier, vol. 105(C), pages 193-214.
    13. Felbermayr, Gabriel & Yotov, Yoto V., 2021. "From theory to policy with gravitas: A solution to the mystery of the excess trade balances," European Economic Review, Elsevier, vol. 139(C).
    14. James E. Anderson & Catherine A. Milot & Yoto V. Yotov, 2011. "The Incidence of Geography on Canada's Services Trade," NBER Working Papers 17630, National Bureau of Economic Research, Inc.
    15. repec:hal:spmain:info:hdl:2441/10187 is not listed on IDEAS
    16. Tamaş Anca, 2020. "Why should the gravity model be taught in business education?," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 14(1), pages 422-433, July.
    17. Claudio Candia Campano & Medardo Aguirre González & Lilliam Antón López & Javier Beltrán Valdebenito, 2018. "A gravity model of trade for Nicaraguan agricultural exports," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 37(74), pages 391-428, July.
    18. Karam, Fida & Zaki, Chahir, 2019. "Why Don’t MENA Countries Trade More? The Curse of Deficient Institutions," The Quarterly Review of Economics and Finance, Elsevier, vol. 73(C), pages 56-77.
    19. de Sousa, José & Mayer, Thierry & Zignago, Soledad, 2012. "Market access in global and regional trade," Regional Science and Urban Economics, Elsevier, vol. 42(6), pages 1037-1052.
    20. James E. Anderson & Yoto V. Yotov, 2012. "Gold Standard Gravity," Boston College Working Papers in Economics 795, Boston College Department of Economics.
    21. Bayarmaa Ganbaatar & Juan Huang & Chuanmin Shuai & Asad Nawaz & Madad Ali, 2021. "Empirical Analysis of Factors Affecting the Bilateral Trade between Mongolia and China," Sustainability, MDPI, vol. 13(7), pages 1-17, April.
    22. Rouatbi, Wael & Demir, Ender & Kizys, Renatas & Zaremba, Adam, 2021. "Immunizing markets against the pandemic: COVID-19 vaccinations and stock volatility around the world," International Review of Financial Analysis, Elsevier, vol. 77(C).
    23. Mwebaze, P., 2018. "The Impact of EU Pesticide Residue standards on African Fresh Produce Exports to the UK," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275998, International Association of Agricultural Economists.

    More about this item

    Keywords

    Covid-19; Malaysia; exports; gravity model; sectoral;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ukm:jlekon:v:55:y:2021:i:1:p:51-69. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Muhammad Asri Abd Ghani (email available below). General contact details of provider: https://edirc.repec.org/data/feukmmy.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.