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

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  • Fumitaka Furuoka

    () (Universiti Malaysia Sabah)

Abstract

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.

Suggested Citation

  • Fumitaka Furuoka, 2007. "Do exports act as “engine” of growth? Evidence from Malaysia," Economics Bulletin, AccessEcon, vol. 6(38), pages 1-14.
  • Handle: RePEc:ebl:ecbull:eb-07f40023
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    References listed on IDEAS

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    1. Hausmann, Ricardo & Rodrik, Dani, 2003. "Economic development as self-discovery," Journal of Development Economics, Elsevier, vol. 72(2), pages 603-633, December.
    2. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    3. 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.
    4. Michaely, Michael, 1977. "Exports and growth : An empirical investigation," Journal of Development Economics, Elsevier, vol. 4(1), pages 49-53, February.
    5. 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.
    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 413-416, 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. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
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    Cited by:

    1. Akmal, Muhammad Shahbaz & Ahmad, Khalil & Ali, Muhammad, 2009. "Exports-Led Growth Hypothesis in Pakistan: Further Evidence," MPRA Paper 16043, University Library of Munich, Germany.
    2. Lean, Hooi Hooi & Smyth, Russell, 2010. "Multivariate Granger causality between electricity generation, exports, prices and GDP in Malaysia," Energy, Elsevier, vol. 35(9), pages 3640-3648.
    3. Lean, Hooi Hooi & Smyth, Russell, 2010. "On the dynamics of aggregate output, electricity consumption and exports in Malaysia: Evidence from multivariate Granger causality tests," Applied Energy, Elsevier, vol. 87(6), pages 1963-1971, June.
    4. Muhammad Shahbaz & Pervaz Azim & Khalil Ahmad, 2011. "Exports-Led Growth Hypothesis in Pakistan: Further Evidence," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(3), pages 182-197, September.
    5. pazim, Khairul Hanim, 2009. "Panel data analysis of “Export-led” Growth Hypothesis in BIMP-EAGA Countries," MPRA Paper 13264, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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