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Trade Causes of the Asian Crisis: The Malaysian Experience

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  • Anita Doraisami

Abstract

Prior to the onset of the Asian financial crisis there was a deterioration in the external trade position of most countries that were affected by the Asian currency crisis. However, little is known about why this occurred. This paper aims to identify the causes of a slowdown in export growth in Malaysia. While misaligned exchange rates have been widely cited as a cause of the slowdown in East Asia; in the Malaysian context at least a vulnerability to the downturn in the electronic cycle could also be a major factor leading to poor export performance. Using the US/yen dollar rate as a proxy for exchange rate misalignment and US total new orders for electronics as a proxy for global electronics demand, cointegration analysis was used to establish the likely causes of a slowdown in Malaysia's export performance. The empirical evidence suggests that the coincidence of exchange rate misalignment with a downturn in the global electronics demand cycle was responsible for the sharp deterioration in export performance. Copyright Blackwell Publishing Ltd 2004.

Suggested Citation

  • Anita Doraisami, 2004. "Trade Causes of the Asian Crisis: The Malaysian Experience," The World Economy, Wiley Blackwell, vol. 27(5), pages 715-725, May.
  • Handle: RePEc:bla:worlde:v:27:y:2004:i:5:p:715-725
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    References listed on IDEAS

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    8. Hiemenz, Ulrich & Agarwal, Jamuna Prasad & Langhammer, Rolf J. & Nunnenkamp, Peter & Spinanger, Dean, 1991. "The international competitiveness of developing countries for risk capital," Open Access Publications from Kiel Institute for the World Economy 747, Kiel Institute for the World Economy (IfW).
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    Cited by:

    1. repec:ebl:ecbull:v:6:y:2008:i:5:p:1-15 is not listed on IDEAS
    2. Anita Giselle Doraisami, 2007. "Financial crisis in Malaysia: did FDI flows contribute to vulnerability?," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(7), pages 949-962.
    3. Kumakura, Masanaga & Kuroko, Masato, 2007. "China's Impact on the Exports of Other Asian Countries: A Note," IDE Discussion Papers 131, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Masanaga Kumakura & Masato Kuroko, 2008. "China's Impact on the Exports of Other Asian Countries: A Note," Economics Bulletin, AccessEcon, vol. 6(5), pages 1-15.

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