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The lead-lag relationship between industrial production and international trade: Malaysian evidence

Author

Listed:
  • Ahmad, Syafiq
  • Masih, Mansur

Abstract

This paper seeks to investigate the lead-lag relationship between industrial production and international trade. The standard time series techniques are applied and Malaysia is used as a case study. We have reviewed a number of studies that analyze some other open East Asian countries such as, South Korea and Taiwan and we noticed that the relationship between these two variables in those countries is unidirectional from trade to industrial production, in the sense that trade openness tends to enhance industrial production through technological transfer. In the case of Malaysia as well, the key empirical finding of this study is that international trade is leading the industrial production like many other East Asian open economies. The results are intuitive and plausible and contain strong policy implications

Suggested Citation

  • Ahmad, Syafiq & Masih, Mansur, 2018. "The lead-lag relationship between industrial production and international trade: Malaysian evidence," MPRA Paper 114290, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:114290
    as

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    File URL: https://mpra.ub.uni-muenchen.de/114290/1/MPRA_paper_114290.pdf
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    References listed on IDEAS

    as
    1. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    2. Ehsan U. Choudhri & Dalia S. Hakura, 2000. "International Trade and Productivity Growth: Exploring the Sectoral Effects for Developing Countries," IMF Staff Papers, Palgrave Macmillan, vol. 47(1), pages 1-2.
    3. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    4. Mansur Masih & Ali Al-Elg & Haider Madani, 2009. "Causality between financial development and economic growth: an application of vector error correction and variance decomposition methods to Saudi Arabia," Applied Economics, Taylor & Francis Journals, vol. 41(13), pages 1691-1699.
    5. Thompson, Henry, 1999. "Production and the Trade Balance in a Small Open Economy," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 14, pages 432-441.
    6. Caves, Richard E, 1980. "International Trade and Industrial Organization: Introduction," Journal of Industrial Economics, Wiley Blackwell, vol. 29(2), pages 113-117, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    industrial production; trade balance; productivity; economic growth; Malaysia;
    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
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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