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Exchange Rate Variability And The Export Demand For Malaysia'S Semiconductors: An Empirical Study

  • Koi Nyen Wong
  • Tuck Cheong Tang

This paper 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 MIDA (Malaysian Industrial Development Authority, 2004). The empirical results, which are estimated based on the Johansen’s multivariate co-integration 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 paper 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.

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File URL: http://www.buseco.monash.edu.au/eco/research/papers/2007/1307variabilitywongtang.pdf
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Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 13-07.

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Length: 22 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:mos:moswps:2007-13
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