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Technical Efficiency of Establishments in Malaysia’s Electrical and Electronics Industries: Exporting or Vertical Trade?

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  • khalifah, noor

    (School of Economics Faculty of Economics and Management Universiti Kebangsaan Malaysia 43600 UKM, Bangi, Selangor, Malaysia)

  • Jaafar, Zakiah

    (Economic Planning Unit Prime Minister’s Department 62502 Putrajaya Malaysia)

Abstract

This study compares export intensity and vertical trade intensity in determining technical efficiency (TE) of establishments in Malaysia’s electrical and electronics industries (E&E) amongst other explanatory variables. We measure fragmentation or vertical trade intensity as two-way trade or the overlap of exports and imported inputs weighted by gross output of establishments. In the overall sample of establishments, vertical trade intensity is a significant determinant of TE whereas export intensity is not. A bigger scale of production, a higher degree of vertical integration and higher labor quality are positively related to TE whereas higher industrial concentration is negatively associated with TE. In the sub-sample of ordinary trading establishments, export intensity is a significant determinant of technical efficiency whereas in the sub-sample of vertical trading establishments, export intensity is not a significant determinant of TE. Higher export intensity does not necessarily mean higher efficiency of establishments and hence, an unqualified policy of export expansion within the context of vertical trade and global value chains in production should be conducted with caution. Technical progress is not significant in all of the models estimated.

Suggested Citation

  • khalifah, noor & Jaafar, Zakiah, 2017. "Technical Efficiency of Establishments in Malaysia’s Electrical and Electronics Industries: Exporting or Vertical Trade?," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 51(1), pages 157-130.
    • Handle: RePEc:ukm:jlekon:v:51:y:2017:i:1:p:157-30
    DOI: https://doi.org/10.17576/JEM-2017-5101-2
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    Cited by:

    1. Jauhari, Azmafazilah Binti & khalifah, noor, 2018. "Trade Linkages and Skill Demand: Empirical Evidence for the Malaysian Electrical and Electronics Industries," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(1), pages 89-103.

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