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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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    File URL: http://www.accessecon.com/pubs/EB/2007/Volume6/EB-07F40023A.pdf
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Bogdan Florin FILIP, 2015. "ECONOMIC GROWTH AND IMPACT FACTORS IN COUNTRIES OF CENTRAL AND EASTERN EUROPE Abstract : This paper starts from the premise that the performance of the economies of different countries, respectively t," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 4(2), pages 1-26, july.
    3. 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.
    4. pazim, Khairul Hanim, 2009. "Panel data analysis of “Export-led” Growth Hypothesis in BIMP-EAGA Countries," MPRA Paper 13264, University Library of Munich, Germany.
    5. 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.

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    JEL classification:

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

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