IDEAS home Printed from https://ideas.repec.org/p/mos/moswps/2007-12.html
   My bibliography  Save this paper

Does Exchange Rate Variability Affect The Causation Between Foreign Direct Investment And Electronics Exports? An Empirical Test Using Malaysian Data

Author

Listed:
  • Koi Nyen Wong
  • Tuck Cheong Tang

Abstract

This paper finds that exchange rate variability does affect the causation between FDI and electronics exports using Malaysia’s top five electronics exports by SITC (Standard International Trade Classification) product groups. The Granger causation runs from FDI to exports of automatic data processing equipment; and from the radio-broadcast receivers with sound recorders or reproducers exports to FDI.

Suggested Citation

  • Koi Nyen Wong & Tuck Cheong Tang, 2007. "Does Exchange Rate Variability Affect The Causation Between Foreign Direct Investment And Electronics Exports? An Empirical Test Using Malaysian Data," Monash Economics Working Papers 12-07, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2007-12
    as

    Download full text from publisher

    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2007/1207exchangewongtang.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
    2. Soo Khoon Goh, 2005. "New empirical evidence on the effects of capital controls on composition of capital flows in Malaysia," Applied Economics, Taylor & Francis Journals, vol. 37(13), pages 1491-1503.
    3. Paul De Grauwe, 1988. "Exchange Rate Variability and the Slowdown in Growth of International Trade," IMF Staff Papers, Palgrave Macmillan, vol. 35(1), pages 63-84, March.
    4. Krugman, Paul, 1989. "The Case for Stabilizing Exchange Rates," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 5(3), pages 61-72, Autumn.
    5. Medhora, Rohinton, 1990. "The effect of exchange rate variability on trade: The case of the West African Monetary Union's imports," World Development, Elsevier, vol. 18(2), pages 313-324, February.
    6. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    7. Penélope Pacheco‐López, 2005. "Foreign Direct Investment, Exports and Imports in Mexico," The World Economy, Wiley Blackwell, vol. 28(8), pages 1157-1172, August.
    8. Caporale, Tony & Doroodian, Khosrow, 1994. "Exchange rate variability and the flow of international trade," Economics Letters, Elsevier, vol. 46(1), pages 49-54, September.
    9. Goldberg, Linda S & Kolstad, Charles D, 1995. "Foreign Direct Investment, Exchange Rate Variability and Demand Uncertainty," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(4), pages 855-873, November.
    10. Pravakar Sahoo, 2004. "FDI and Technology Intensive Exports in India," The IUP Journal of Applied Economics, IUP Publications, vol. 0(3), pages 25-36, May.
    11. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
    12. Cushman, David O, 1985. "Real Exchange Rate Risk, Expectations, and the Level of Direct Investment," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 297-308, May.
    13. Alguacil, Ma. Teresa & Cuadros, Ana & Orts, Vicente, 2002. "Foreign direct investment, exports and domestic performance in Mexico: a causality analysis," Economics Letters, Elsevier, vol. 77(3), pages 371-376, November.
    14. Hsiao, Frank S.T. & Hsiao, Mei-Chu W., 2006. "FDI, exports, and GDP in East and Southeast Asia--Panel data versus time-series causality analyses," Journal of Asian Economics, Elsevier, vol. 17(6), pages 1082-1106, December.
    Full references (including those not matched with items on IDEAS)

    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. repec:ebl:ecbull:v:6:y:2007:i:14:p:1-8 is not listed on IDEAS
    2. Tuck Cheong Tang & Koi Nyen Wong, 2007. "Foreign Direct Investment and Electronics Exports: Exploratory Empirical Evidence from Malaysia's Top Five Electronics Exports," Economics Bulletin, AccessEcon, vol. 6(14), pages 1-8.
    3. Choudhry, Taufiq, 2005. "Exchange rate volatility and the United States exports: evidence from Canada and Japan," Journal of the Japanese and International Economies, Elsevier, vol. 19(1), pages 51-71, March.
    4. Koi Nyen Wong & Tuck Cheong Tang & Dietrich Fausten, 2009. "Foreign Direct Investment and Services Trade: Evidence from Malaysia and Singapore," Global Economic Review, Taylor & Francis Journals, vol. 38(3), pages 265-276.
    5. Isabel Cortés-Jiménez & Manuel Artís, 2005. "The role of the tourism sector in economic development - Lessons from the Spanish experience," ERSA conference papers ersa05p488, European Regional Science Association.
    6. Claude Diebolt & Cédric Doliger, 2005. "Becker vs. Easterlin. Education, Fertility and Growth in France after World War II," Working Papers 05-03, Association Française de Cliométrie (AFC).
    7. David Greasley & Les Oxley, 2010. "Cliometrics And Time Series Econometrics: Some Theory And Applications," Journal of Economic Surveys, Wiley Blackwell, vol. 24(5), pages 970-1042, December.
    8. Man-Keun Kim & Kangil Lee, 2015. "Dynamic Interactions between Carbon and Energy Prices in the U.S. Regional Greenhouse Gas Initiative," International Journal of Energy Economics and Policy, Econjournals, vol. 5(2), pages 494-501.
    9. Walid M.A. Ahmed, 2012. "On the interdependence structure of market sector indices: the case of Qatar Exchange," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 11(4), pages 468-488, October.
    10. Marcin Humanicki & Robert Kelm & Krzysztof Olszewski, 2013. "Foreign Direct Investment and Foreign Portfolio Investment in the contemporary globalized world: should they be still treated separately?," NBP Working Papers 167, Narodowy Bank Polski.
    11. Chang, Tsangyao & Nieh, Chien-Chung, 2004. "A note on testing the causal link between construction activity and economic growth in Taiwan," Journal of Asian Economics, Elsevier, vol. 15(3), pages 591-598, June.
    12. Tang, Chor Foon, 2008. "A re-examination of the relationship between electricity consumption and economic growth in Malaysia," Energy Policy, Elsevier, vol. 36(8), pages 3067-3075, August.
    13. Hermann Sintim-Aboagye & Chandana Chakraborty & Serapio Byekwaso, 2017. "Foreign Capital Flows, Uncertainties of Exchange Rates and Central Bank Independence: Implications for Emerging Economies," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 45(4), pages 485-496, December.
    14. Koi Nyen Wong & Tuck Cheong Tang, 2009. "New Evidence on the Causal Linkages Between Foreign Direct Investment,Exports and Imports in Malaysia," The IUP Journal of Applied Economics, IUP Publications, vol. 0(1), pages 20-25, January.
    15. Hanan Naser, 2015. "Can Nuclear Energy Stimulates Economic Growth? Evidence from Highly Industrialised Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 5(1), pages 164-173.
    16. Marques, André M. & Carvalho, André R., 2022. "Testing the neo-fisherian hypothesis in Brazil," The Quarterly Review of Economics and Finance, Elsevier, vol. 86(C), pages 407-419.
    17. Arbeláez, Harvey & Ruiz, Isabel, 2013. "Macroeconomic antecedents to U.S. investment in Latin America," Journal of Business Research, Elsevier, vol. 66(3), pages 439-447.
    18. Nafeesa Yunus & Peggy Swanson, 2007. "Modelling Linkages between US and Asia‐Pacific Securitized Property Markets," Journal of Property Research, Taylor & Francis Journals, vol. 24(2), pages 95-122.
    19. Rudra P. Pradhan & Mak B. Arvin & John H. Hall, 2019. "The Nexus Between Economic Growth, Stock Market Depth, Trade Openness, And Foreign Direct Investment: The Case Of Asean Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(03), pages 461-493, June.
    20. Athanasia S. Kalaitzi, 2018. "The Causal Effects of Trade and Technology Transfer on Human Capital and Economic Growth in the United Arab Emirates," Sustainability, MDPI, vol. 10(5), pages 1-15, May.
    21. Kalaitzi, Athanasia Stylianou & Chamberlain, Trevor William, 2021. "The validity of the export-led growth hypothesis: some evidence from the GCC," LSE Research Online Documents on Economics 106586, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Causality; electronics exports; foreign direct investment;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:mos:moswps:2007-12. 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: Simon Angus (email available below). General contact details of provider: https://edirc.repec.org/data/dxmonau.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.