IDEAS home Printed from https://ideas.repec.org/a/ibn/masjnl/v8y2014i6p238.html
   My bibliography  Save this article

An Empirical Analysis of Exports between Malaysia and TPP Member Countries: Evidence from a Panel Cointegration (FMOLS) Model

Author

Listed:
  • Irwan Shah Zainal Abidin
  • Nor Aznin Abu Bakar
  • Muhammad Haseeb

Abstract

The aim of this study is to investigate empirically the role of Malaysian exports to TPP countries towards economic growth of Malaysia from 1997 to 2012. The results of this study confirm that Malaysian exports to TPP countries contribute in economic growth of Malaysia. Therefore, the result of this study is obtained through the empirical investigation of the model. Mainly, empirical investigation is based on FMOLS model but some preliminary tests are also performed. The results of unit root test presents that all Variables are non-stationary at level I(0) and become stationary after first difference I(1). In addition, results of Kao’s panel cointegration shows that all the variables are cointegrated. Furthermore, Results of FMOLS confirms that out of all the variables included in the model, GDP, TRGDP and ER have significant effect on the exports. ECM panel unit root test were applied to confirm the stability of FMOLS. According to the unit root test of the residuals of FMOLS model, it can be confirmed that the long run results are not spurious. Results of Panel ECM show that out of all variables GDP and TRGDP are positively effect on exports. Finally, results of Granger Causality show that only CPI, GDP and TRGDP are cause exports in Malaysia. The government of Malaysia through understood the importance of exports with TPP member countries to boost economic growth. The latter not only contributes to economic growth through capital formation but also promotes trade activity by making financial resources available at lower cost; attracting foreign direct investment as well as facilitating development of advanced technology. Moreover, this study not only contribute to the exports and economic growth literature but also will guide the policy maker to chalk out right, effective and appropriate policy in order to improve exports between Malaysia and TPP countries.Â

Suggested Citation

  • Irwan Shah Zainal Abidin & Nor Aznin Abu Bakar & Muhammad Haseeb, 2014. "An Empirical Analysis of Exports between Malaysia and TPP Member Countries: Evidence from a Panel Cointegration (FMOLS) Model," Modern Applied Science, Canadian Center of Science and Education, vol. 8(6), pages 238-238, December.
  • Handle: RePEc:ibn:masjnl:v:8:y:2014:i:6:p:238
    as

    Download full text from publisher

    File URL: https://ccsenet.org/journal/index.php/mas/article/download/40166/23008
    Download Restriction: no

    File URL: https://ccsenet.org/journal/index.php/mas/article/view/40166
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Romain Wacziarg & Karen Horn Welch, 2008. "Trade Liberalization and Growth: New Evidence," The World Bank Economic Review, World Bank, vol. 22(2), pages 187-231, June.
    3. Pedroni, Peter, 2004. "Panel Cointegration: Asymptotic And Finite Sample Properties Of Pooled Time Series Tests With An Application To The Ppp Hypothesis," Econometric Theory, Cambridge University Press, vol. 20(3), pages 597-625, June.
    4. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    5. Subrata Ghatak & Chris Milner & Utku Utkulu, 1997. "Exports, export composition and growth : cointegration and causality evidence for Malaysia," Applied Economics, Taylor & Francis Journals, vol. 29(2), pages 213-223.
    6. Barro, Robert J & Sala-i-Martin, Xavier, 1997. "Technological Diffusion, Convergence, and Growth," Journal of Economic Growth, Springer, vol. 2(1), pages 1-26, March.
    7. Khalid Yousif Khalafalla & Alan Webb, 2001. "Export-led growth and structural change: evidence from Malaysia," Applied Economics, Taylor & Francis Journals, vol. 33(13), pages 1703-1715.
    8. Francisco Alcalá & Antonio Ciccone, 2004. "Trade and Productivity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(2), pages 613-646.
    9. Chun‐ping Chang & Yung‐hsiang Ying, 2008. "The Generative Power Of Air Freight In The Trade Openness – Economic Growth Nexus In African Countries," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 493-512, September.
    10. Redding, Stephen, 1999. "Dynamic Comparative Advantage and the Welfare Effects of Trade," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 15-39, January.
    11. Francisco L. Rivera-Batiz & Luis A. Rivera-Batiz, 2018. "International Trade with Endogenous Technological Change," World Scientific Book Chapters, in: Francisco L Rivera-Batiz & Luis A Rivera-Batiz (ed.), International Trade, Capital Flows and Economic Development, chapter 2, pages 33-70, World Scientific Publishing Co. Pte. Ltd..
    12. Dong-Hyeon Kim & Shu-Chin Lin, 2009. "Trade and Growth at Different Stages of Economic Development," Journal of Development Studies, Taylor & Francis Journals, vol. 45(8), pages 1211-1224.
    13. Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, vol. 90(1), pages 1-44, May.
    14. Vatthanamixay Chansomphou & Masaru Ichihashi, 2011. "The impact of trade openness on the incomes of four South East Asian countries before and after the Asian financial crisis," Economics Bulletin, AccessEcon, vol. 31(4), pages 2890-2902.
    15. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    16. Richard Kneller & C. W. Morgan & Sunti Kanchanahatakij, 2008. "Trade Liberalisation and Economic Growth," The World Economy, Wiley Blackwell, vol. 31(6), pages 701-719, June.
    17. Dong‐Hyeon Kim & Shu‐Chin Lin & Yu‐Bo Suen, 2011. "Nonlinearity between Trade Openness and Economic Development," Review of Development Economics, Wiley Blackwell, vol. 15(2), pages 279-292, May.
    18. Jagdish N. Bhagwati, 1978. "Anatomy of Exchange Control Regimes," NBER Chapters, in: Foreign Trade Regimes and Economic Development: Anatomy and Consequences of Exchange Control Regimes, pages 7-52, National Bureau of Economic Research, Inc.
    19. Maddala, G S & Wu, Shaowen, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-652, Special I.
    20. Karras, Georgios, 2003. "Trade Openness And Economic Growth Can We Estimate The Precise Effect?," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 3(1).
    21. Anne O. Krueger, 1978. "Foreign Trade Regimes and Economic Development: Liberalization Attempts and Consequences," NBER Books, National Bureau of Economic Research, Inc, number krue78-1, January.
    22. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    23. Farhad Rassekh, 2007. "Is International Trade More Beneficial to Lower Income Economies? An Empirical Inquiry," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 159-169, February.
    24. 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.
    25. Gilles Dufrenot & Valerie Mignon & Charalambos Tsangarides, 2010. "The trade-growth nexus in the developing countries: a quantile regression approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(4), pages 731-761, December.
    26. Edwards, Sebastian, 1992. "Trade orientation, distortions and growth in developing countries," Journal of Development Economics, Elsevier, vol. 39(1), pages 31-57, July.
    27. Subrata Ghatak & Stephen Price, 1997. "Export composition and economic growth: Cointegration and causality evidence for India," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 133(3), pages 538-553, September.
    28. Nishimizu, Mieko & Robinson, Sherman, 1984. "Trade policies and productivity change in semi-industrialized countries," Journal of Development Economics, Elsevier, vol. 16(1-2), pages 177-206.
    29. Josep Lluís Carrion‐i‐Silvestre & Andreu Sansó, 2006. "Testing the Null of Cointegration with Structural Breaks," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(5), pages 623-646, October.
    30. G. S. Maddala & Shaowen Wu, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 631-652, November.
    31. Jagdish N. Bhagwati, 1978. "Foreign Trade Regimes and Economic Development: Anatomy and Consequences of Exchange Control Regimes," NBER Books, National Bureau of Economic Research, Inc, number bhag78-1, January.
    32. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Muhammad Haseeb & Nira Hartani & Nor’ Aznin Abu Bakar, 2015. "The Nexus between Female Labour Force Participation (FLFP) and Fertility rate in Selected ASEAN Countries: Panel Cointegration Approach," Modern Applied Science, Canadian Center of Science and Education, vol. 9(8), pages 1-29, August.

    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. Shahbaz, Muhammad, 2012. "Does trade openness affect long run growth? Cointegration, causality and forecast error variance decomposition tests for Pakistan," Economic Modelling, Elsevier, vol. 29(6), pages 2325-2339.
    2. Yaya Keho, 2017. "The impact of trade openness on economic growth: The case of Cote d’Ivoire," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1332820-133, January.
    3. T. Gries & M. Redlin, 2020. "Trade and economic development: global causality and development- and openness-related heterogeneity," International Economics and Economic Policy, Springer, vol. 17(4), pages 923-944, October.
    4. Touitou Mohammed, 2021. "The Relationship between Economic Growth, Energy Consumption and CO2 Emission in the Middle East and North Africa (MENA)," Folia Oeconomica Stetinensia, Sciendo, vol. 21(2), pages 132-147, December.
    5. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    6. Hakimi, Abdelaziz & Hamdi, Helmi, 2016. "Trade liberalization, FDI inflows, environmental quality and economic growth: A comparative analysis between Tunisia and Morocco," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1445-1456.
    7. Márquez, Miguel A. & Ramajo, Julián & Hewings, Geoffrey J. D., 2011. "Public Capital and Regional Economic Growth: a SVAR Approach for the Spanish Regions," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 21, pages 199-223.
    8. Mushtaq Ahmad Malik & Tariq Masood, 2022. "Dynamics of Output Growth and Convergence in the Middle East and North African Countries: Heterogeneous Panel ARDL Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(2), pages 1444-1469, June.
    9. Wang, Kuan-Min, 2011. "Health care expenditure and economic growth: Quantile panel-type analysis," Economic Modelling, Elsevier, vol. 28(4), pages 1536-1549, July.
    10. Nasiruddin Ahmed, 2003. "Trade liberalization and endogenous growth of manufacturing industries in Bangladesh: an empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 35(3), pages 305-314.
    11. Jacobo Campo Robledo & Juan Pablo Herrera Saavedra, 2016. "Patentes y crecimiento económico: ¿innovación de residentes o no residentes?," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, vol. 76, February.
    12. Mohammad Mafizur Rahman & Xuan-Binh (Benjamin) Vu & Son Nghiem, 2022. "Economic Growth in Six ASEAN Countries: Are Energy, Human Capital and Financial Development Playing Major Roles?," Sustainability, MDPI, vol. 14(8), pages 1-17, April.
    13. Ramesh Chandra Das, 2020. "Interplays among R&D spending, patent and income growth: new empirical evidence from the panel of countries and groups," Journal of Innovation and Entrepreneurship, Springer, vol. 9(1), pages 1-22, December.
    14. Ramesh Chandra Das & Tonmoy Chatterjee, 2021. "Trade liberalization and R&D activity: examining long-run and short-run linkages for individual and panel of leading countries and groups," Economic Change and Restructuring, Springer, vol. 54(4), pages 1091-1118, November.
    15. Azam, Anam & Ateeq, Muhammad & Shafique, Muhammad & Rafiq, Muhammad & Yuan, Jiahai, 2023. "Primary energy consumption-growth nexus: The role of natural resources, quality of government, and fixed capital formation," Energy, Elsevier, vol. 263(PA).
    16. Ozcan, Burcu & Temiz, Mehmet & Gültekin Tarla, Esma, 2023. "The resource curse phenomenon in the case of precious metals: A panel evidence from top 19 exporting countries," Resources Policy, Elsevier, vol. 81(C).
    17. Fr餩ric Laurin, 2012. "Trade and regional growth in Spain: panel cointegration in a small sample," Applied Economics, Taylor & Francis Journals, vol. 44(4), pages 435-447, February.
    18. Carlos Alberto Barreto Nieto & Jacobo Campo Robledo, 2012. "Relación a largo plazo entre consumo de energía y PIB en América Latina: Una evaluación empírica con datos panel," Revista Ecos de Economía, Universidad EAFIT, October.
    19. Bajo-Rubio, Oscar & Ramos-Herrera, María del Carmen, 2023. "Does international trade promote economic growth? Europe, 19th and 20th centuries," GLO Discussion Paper Series 1358, Global Labor Organization (GLO).
    20. Sinesipho Siswana & Andrew Phiri, 2021. "Is Export Diversification or Export Specialization Responsible for Economic Growth in BRICS Countries?," The International Trade Journal, Taylor & Francis Journals, vol. 35(3), pages 243-261, May.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    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:ibn:masjnl:v:8:y:2014:i:6:p:238. 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: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.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.