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Export-led growth and structural change: evidence from Malaysia

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  • Khalid Yousif Khalafalla
  • Alan Webb

Abstract

Many studies have tried to establish the causal link between export expansion and economic growth. This contribution is to recognize that structural changes will change the sources of growth and this will affect the export-growth relationship. A country case study approach is used focusing on Malaysia, a country with one of the world's highest sustained growth rates and a long history of commodity trade. We use VAR analysis of Malaysian quarterly trade and GDP growth from 1965 to 1996. Trade data are disaggregated into primary and manufactures exports and causality tests are applied to the entire period as well as two subperiods #150 the 1965 #1501980 period when policy emphasis was on import substitution and the 1981#1501996 period when policies favoured export-led growth. Statistical tests confirm export-led growth for the full period and for the period to 1980 but tests on the 1981#1501996 period show growth causing exports. Primary exports had a stronger direct impact on economic growth than manufactures. The weakening support for export-led growth after Malaysia shifted to an export-oriented development strategy is associated with structural changes associated with industrialization. Interaction among trade and growth variables becomes more complex with a broadening export base and more diverse sources of growth.

Suggested Citation

  • 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.
  • Handle: RePEc:taf:applec:v:33:y:2001:i:13:p:1703-1715
    DOI: 10.1080/00036840010015066
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    Cited by:

    1. Isabel Cortes-Jimenez & Manuela Pulina, 2006. "Tourism and Growth: Evidence for Spain and Italy," ERSA conference papers ersa06p128, European Regional Science Association.
    2. Isabel Cortés-Jiménez & Manuel Artís, 2005. "The role of the tourism sector in economic development - Lessons from the Spanish experience," ERSA conference papers ersa05p488, European Regional Science Association.
    3. Narayan, S. & Sriananthakumar, S. & Islam, S.Z., 2014. "Stock market integration of emerging Asian economies: Patterns and causes," Economic Modelling, Elsevier, vol. 39(C), pages 19-31.
    4. Sumie Sato & Mototsugu Fukushige, 2007. "The End of Import-Led Growth? North Korean Evidence," Discussion Papers in Economics and Business 07-38, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    5. Bianca Biagi & Manuela Pulina, 2009. "Bivariate VAR models to test Granger causality between tourist demand and supply: Implications for regional sustainable growth," Papers in Regional Science, Wiley Blackwell, vol. 88(1), pages 231-244, March.
    6. Shafiullah, Muhammad & Selvanathan, Saroja & Naranpanawa, Athula, 2017. "The role of export composition in export-led growth in Australia and its regions," Economic Analysis and Policy, Elsevier, vol. 53(C), pages 62-76.
    7. M. Pulina & B. Biagi, 2006. "Tourism, environmental quality and economic growth: empirical evidence and policy implications," Working Paper CRENoS 200609, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    8. Bilas Vlatka & Franc Sanja & Bošnjak Mile, 2015. "Examining the Export-led Growth Hypothesis: The case of Croatia," Naše gospodarstvo/Our economy, De Gruyter Open, vol. 61(3), pages 22-31, June.
    9. Sato, Sumie & Fukushige, Mototsugu, 2011. "The North Korean economy: Escape from import-led growth," Journal of Asian Economics, Elsevier, vol. 22(1), pages 76-83, February.
    10. 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.
    11. Lee, Chin, 2013. "The Role of Macroeconomic Fundamentals in Malaysian Post Recession Growth," MPRA Paper 44808, University Library of Munich, Germany.
    12. Abhijit Sharma & Theodore Panagiotidis, 2003. "An Analysis of Exports and Growth in India: Some Empirical Evidence (1971-2001)," Working Papers 2003004, The University of Sheffield, Department of Economics, revised Nov 2003.
    13. Harrison, Ann & Rodríguez-Clare, Andrés, 2010. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," Handbook of Development Economics, Elsevier.
    14. Hsieh, Wen-jen, 2011. "The Global Economic Recession and Industrial Structure: Evidence from Four Asian Dragons," ADBI Working Papers 315, Asian Development Bank Institute.

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