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Exchange rate variability and the export demand for Malaysia's semiconductors: an empirical study

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  • Koi Nyen Wong
  • Tuck Cheong Tang

Abstract

This article examines the effects of exchange rate variability on export demand for semiconductors, which is the largest sub-sector of electronics industry in Malaysia as reported by Malaysian Industrial Development Authority (MIDA, 2004). The empirical results, which are estimated based on the Johansen's multivariate cointegration tests and error-correction model, suggest that there is a unique long-run relationship among quantities of export, relative price, real foreign income and real exchange rate variability. The major finding of this article is that the variability of real exchange rate has some effect on semiconductor exports in both the long run and the short run. In the light of rapid advances in technology in the global markets for electronics products, the findings are useful to policy makers for the design and target of appropriate exchange rate and industrial policies to enhance the export competitiveness of semiconductor industry.

Suggested Citation

  • Koi Nyen Wong & Tuck Cheong Tang, 2009. "Exchange rate variability and the export demand for Malaysia's semiconductors: an empirical study," Applied Economics, Taylor & Francis Journals, vol. 43(6), pages 695-706.
  • Handle: RePEc:taf:applec:v:43:y:2009:i:6:p:695-706
    DOI: 10.1080/00036840802599917
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    Cited by:

    1. Anthony Orji & Jonathan E. Ogbuabor & Chiamaka Okeke & Onyinye I. Anthony Orji, 2020. "Exchange rate movements and the export sector: new empirical evidence from Nigeria," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 80-93,94-10.
    2. Wong Hock Tsen, 2016. "Exchange rate volatilities and disaggregated bilateral exports of Malaysia to the United States: empirical evidence," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 6(2), pages 289-314, August.
    3. M. Hakan Berument & Zulal S. Denaux & Yeliz Yalcin, 2015. "The Inconsistent Response Of Turkish Export Demand To Real Exchange Rate Shocks," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 9(1), pages 49-56.
    4. Hock Tsen Wong, 2017. "Exchange rate volatility and bilateral exports of Malaysia to Singapore, China, Japan, the USA and Korea," Empirical Economics, Springer, vol. 53(2), pages 459-492, September.
    5. Ranajoy Bhattacharyya & Bipradas Rit, 2018. "On the Relationship between the Nominal Exchange Rate and Export Demand in India," South Asian Journal of Macroeconomics and Public Finance, , vol. 7(2), pages 260-282, December.
    6. Joseph Dery Nyeadi & Oswald Atiga & Charles Amoyea Atogenzoya, 2014. "The Impact of Exchange Rate Movement on Export: Empirical Evidence from Ghana," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(3), pages 41-48, July.

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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