On the Role Exports in the Economic Growth of Malaysia: A Multivariate Analysis

Abstract

In recent years a number if studies have attempted to examine the export-led Growth hypothesis in the Malaysian context. The evidence is, however mixed and inconclusive. This might be attributed to the fact that previous studies are bivariate in that they only focus on the relationship between exports and economic growth. Therefore, in the present paper we reexamine the relationship between exports and economic growth in the Malaysian context using a multivariate model in which other relevant factors (exchange rate, labor, and capital) are allowed to exert their influence on the two basic variables (exports and economic growth). Our results are supportive of the export-led growth as a short-run phenomenon in Malaysia. Over the long-run, however, our results supports, instead, the internally generated growth hypothesis. [O47]