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Energy Tax and the Downstream Palm Oil Trade Competitiveness Nexus in Malaysia: An Application of GMM Approach

Author

Listed:
  • Norashida Othman

    (Faculty of Business and Management, Universiti Teknologi MARA, 42300 Puncak Alam, Selangor, Malaysia)

  • Zulkornain Yusop

    (Putra Business School (PBS), 43400 Serdang, Selangor, Malaysia)

  • Mohd Mansor Ismail

    (Institute of Agricultural and Food Policy Studies, Universiti Putra Malaysia, 43400 Serdang, Selangor, Malaysia,)

  • Syamsul Herman Mohammad Afandi

    (School of Business and Economics UPM, Universiti Putra Malaysia, 43400 Serdang, Selangor, Malaysia)

Abstract

This paper analyses the impact of energy tax imposed in European Union countries on Malaysia s downstream palm oil trade competitiveness. The competitiveness factors consist four major attributes adopted from Porter Diamond Model (PDM) framework introduced by Porter (1990) that determine the national competitiveness and analyses using the dynamic generalized method of moments (GMM) proposed by Arellano and Bond (1991). The study utilizes yearly data spanning from 2009 until 2016. The results indicate that energy taxes have positive and significant influence on Malaysia s trade competitiveness of palm oil downstream products (oleochemicals, biodiesel and palm-based finished products) and the result also suggests that all the main factors of PDM (i.e factor condition; demand condition; firm strategy and rivalry; and related supporting industry) significantly influence the competitiveness of the industry. The policy recommendation remains that, in order for Malaysia to improve the competitiveness of palm oil downstream industries, producers need to ensure that the country's palm oil production is sustainable, which is stipulated by international agreements, especially in EU countries, where environmental sustainability is their main concern.

Suggested Citation

  • Norashida Othman & Zulkornain Yusop & Mohd Mansor Ismail & Syamsul Herman Mohammad Afandi, 2021. "Energy Tax and the Downstream Palm Oil Trade Competitiveness Nexus in Malaysia: An Application of GMM Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 593-599.
    • Handle: RePEc:eco:journ2:2021-05-68
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    More about this item

    Keywords

    Competitiveness; Palm Oil Downstream; Energy tax; Porter Hypothesis; DGMM;
    All these keywords.

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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