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Do exports act as “engine” of growth? Evidence from Malaysia

  • Fumitaka Furuoka


    (Universiti Malaysia Sabah)

For decades, the conventional wisdom for a developing nation striving to achieve an impressive economic growth has been to carve a niche in the global marketplace. However, empirical findings of various research studies on the “export-led growth” hypothesis do not provide a solid evidence to support this viewpoint. The current paper chooses one of the “East Asian Miracle” economies, Malaysia, to empirically examine whether exports act as the “engine” of growth. The results of the empirical analysis do not support the “export-led growth” hypothesis. Rather, they lead to a conclusion that there exists a “virtuous cycle” or mutually reinforcing relationship between Malaysia's exports and GDP in the long run. The findings also detected unidirectional short run causality from GDP to exports, but not vice versa. This means that the increase in Malaysia''s export tends to be an effect, and not the cause, of the country''s output expansion.

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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 6 (2007)
Issue (Month): 38 ()
Pages: 1-14

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Handle: RePEc:ebl:ecbull:eb-07f40023
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  1. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
  2. Michaely, Michael, 1977. "Exports and growth : An empirical investigation," Journal of Development Economics, Elsevier, vol. 4(1), pages 49-53, February.
  3. Ricardo Hausmann & Dani Rodrik, 2002. "Economic Development as Self-Discovery," NBER Working Papers 8952, National Bureau of Economic Research, Inc.
  4. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
  5. Jim Love & Ramesh Chandra, 2005. "Testing export-led growth in South Asia," Journal of Economic Studies, Emerald Group Publishing, vol. 32(2), pages 132-145, May.
  6. Jaleel Ahmad & Somchai Harnhirun, 1996. "Cointegration and Causality between Exports and Economic Growth: Evidence from the ASEAN Countries," Canadian Journal of Economics, Canadian Economics Association, vol. 29(s1), pages 413-16, April.
  7. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
  8. Jung, Woo S. & Marshall, Peyton J., 1985. "Exports, growth and causality in developing countries," Journal of Development Economics, Elsevier, vol. 18(1), pages 1-12.
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