Research

Y. Amjad · N.A.M Naseem · W.N.W. Azman-Saini · Tajul Ariffin Masron · K. Kriskkumar ·Jurnal Ekonomi Malaysia ·2018

Export has been considered as main contributor to economic growth in which also known as export-led growth (ELG) hypothesis. The purpose of this study is to identify the export-led growth nexus in Malaysia. Specifically, this study focuses on disaggregated level of exports such as export of goods and manufactured sectors. By using ARDL co-integration technique for data that covers from 1980 to 2015, the result discovers that exports have positive impact on economic growth, particularly at disaggregated levels of exports namely exports of goods and export of manufactured sectors. This further supports the validation of the export-led growth hypothesis, especially in small, open and dynamic economy like Malaysia. From policy point of view, Malaysia policy makers should give special focus to search for better catalyst of exports promotion strategy to continuously and effectively promote long-term economic growth.

Malik Cahyadin · Tamat Sarmidi ·Jurnal Ekonomi Malaysia ·2019

The study aims to estimate the impact of Foreign Direct Investment (FDI), labour, and external debt on economic growth in Indonesia and Malaysia over the period 1980-2016. The fndings are expected to serve as a reference for macroeconomic policies in Indonesia and Malaysia. Employing an Autoregressive Distributed Lag Model (ARDL) and Error Correction Model (ECM), we fnd that FDI, labour force and external debt have a signifcant impact on the economic growth in the long- and short- run in both countries. Statistically, the estimated models are stable. Therefore, it is recommended that the authorities in Indonesia and Malaysia should concentrate on attracting more quality FDI infows and properly manage external debts as well as high-skilled labour force, which are vital to economic growth.

Gani Ibrahim Musa · Zakaria Bahari · Azreen Hamiza Abdul Aziz ·Jurnal Ekonomi Malaysia ·2020

The primary purpose of the financial sector of an economy is financial intermediation. Financial intermediation activities of channelling funds from surplus to the deficit units in the economy including through capital market affect the economic growth of a country. The role of Islamic capital market in the process of affecting the growth of an economy is another dimension in finance-growth nexus. This study empirically examines the impact of Islamic capital market on Malaysian economy. It employs the ARDL bounds test approach for cointegration. The results revealed that in the long-run, Islamic capital market contributes to the Malaysian economy by way of capital formation and the efficiency of the capital served as channels of transmitting growth. However, in the short run, only Islamic capital market measure of Islamic stock market turnover contributes to the economy with productivity of capital as the only channel of transmitting growth. Moreover, there is evidence of causality between the Islamic capital market turnover and the Malaysian economy. The findings imply that the Islamic capital market effectively channelled and pooled funds to productive investment activities. It further proves the notion that in general, Islamic finance is more inclined towards real sector growth as compared to conventional counterpart due to the emphasis on equity-based financing as opposed to debt-based financing.

Judhiana A. Ghani · Mohamad Khair Afham · Muhamad Senan · Asna Atqa Abdullah · Norashidah Mohd Noor ·International Journal of Economics and Management ·2021 ·JEL: H72, H77, E62, F34

The link between fiscal decentralisation and state-level economic growth has often been overlooked, particularly in Malaysia, with its highly centralised federal fiscal system. Thus, using data from all 13 Malaysian states from 2006 to 2018, this study evaluated the degree of fiscal decentralisation and examined its effects on state economic growth. This study employed a new proxy for fiscal decentralisation (FD), a composite variable FD comprising two components: fiscal autonomy (FA) and fiscal importance (FI). The model was examined using the fixed effects technique with robust standard error panel analysis. The empirical results demonstrated that FI and FD were significant and positively impacted economic growth across states. The results also showed the significant and negative impact of budget balances resulting from persistent fiscal deficits on state economic growth, signalling states' heavy reliance on intergovernmental grants and borrowings (soft budget constraints). Thus, fiscal decentralisation has enabled the state governments to alleviate the soft budget constraint problem and reduce the negative impact of deficits on local economic growth. Overall, the results supported prior findings that fiscal decentralisation had a significant positive effect on state economic growth.

Siong Hook Law · Tamat Sarmidi · Lim Thye Goh ·Malaysian Journal of Economic Studies ·2020 ·JEL: O11, O31, O43

This study empirically investigates the effect of innovation on economic growth using the neoclassical economic growth model. Embarking from the traditional labour growth, physical capital and human capital framework, innovation is postulated to be the main driver for robust economic growth. Using time series techniques, we discover very attention-grabbing findings that highlight the impact of innovation on economic growth for Malaysia. First, the innovation measured by the quantity of a total number of a patent application is statistically insignificant. The result is robust for various innovation measurements, including total local patent application and total foreign patent application. Interestingly, switching to total patent grant instead of a total number of patent application (local or foreign), the empirical result shows a significant impact on economic growth. The finding indirectly reveals the crucial impact of quality innovation rather than the quantity concern. Neglecting both quality and the commercialisation process of these new technologies may not solve the rigidity of knowledge commercialisation paradox. Finally, we test for the prominent institutional quality in mediating economic growth under a knowledge-based economy. The interaction between institutional quality and the total patent grant has significantly accelerated the role of innovation channel to economic growth. The empirical findings imply that inadequacy of innovative technology flow over the long term has a detrimental effect on national innovative capacity. Thus, the innovation-economic growth nexus needs to be complemented with a good institutional quality framework, skilled human capital and broader networking to commercialise the innovative product to ensure that the innovation activities promote economic growth.

Kyunga Na · Young-Hee Kang ·Journal of Open Innovation: Technology Market and Complexity ·2019

This study aims to investigate the effects of product and process innovations on manufacturing firm performance in Southeast Asian emerging markets. To this end, using a cross-national sample of 2324 manufacturing firms from the World Bank Enterprise Survey (WBES) dataset of 2015, we test the effects of product and process innovations on the sales growth of manufacturing firms in Vietnam, Malaysia, and Indonesia. This study finds that product innovation is positively related to sales growth while new operating technologies are negatively associated with sales growth. For high-tech firms, product innovation is positively related to sales growth. The findings imply that in Southeast Asian emerging markets, governments and manufacturing firms can enhance performance by investing in product innovation.

Mui-Yin Chin · Chin-Hong Puah · Cia-Ling Teo · Justina Joseph ·International Journal of Energy Economics and Policy ·2018 ·JEL: F18; F43; Q43

In light of the deterioration of environmental quality, this study aims to identify the determinants of CO2 emissions in Malaysia using the autoregressive distributed lag and the decomposition-type threshold methods. This study signifies that economic growth is the main contributor to CO2 emissions which is in line with the theory of the Environmental Kuznets Curve curve. Meanwhile, this study also confirms that vertical intra-industry trade between Malaysia and China together with the bilateral FDI from China to Malaysia are the significant determinants of CO2 emissions in Malaysia. As such, this study suggests that the Malaysian government should monitor the implementation of the green growth strategy to enhance the sustainability of the economic and trade growth without compromising environmental quality

Mohammad Sharif Karimi ·International Economic Journal ·2018 ·JEL: C22; O11

In this study, we examine the nonlinear relationship between international tourism arrival and economic growth of Malaysia by using asymmetric models over the periods 2000:1–2015:4. The results show that the tourism arrival is positively related to Malaysia’s economic growth in the long run, but there is no short-run relationship and other traditional growth factors such as trade, exchange rate and Consumer Price Index are important for economic growth in the case of Malaysia. This implies that tourism can be one of the important factors for Malaysia’s economic growth in the long run and development and can be used to stimulate the overall economic growth and hence, policy-makers should pay greater attention towards promoting inbound tourism.

Abdul Rahim Ridzuan · Vikniswari Vija Kumaran · Bayu Arie Fianto · Mohd Shahidan Shaari · Miguel Ange Esquivias · Aliashim Albani ·International Journal of Energy Economics and Policy ·2022

Over the past forty years, Malaysia has achieved tremendous economic growth because of higher investment from foreigner such as from China, Japan, and US. Many multinational companies (MNC) have allocated their factories especially in more developed state such as Selangor, Penang and Johor to focused on their operation. The country able to receive various benefits from this investment in the form of job creation, advancement in technology, better income distribution and at same time, some negative externalities such as environmental degradation can also take place from those operation. Given this situation, it is interesting to investigate the current state of sustainable development for Malaysia by considering the impacts of FDI. This paper focused on investigating the presence of Environmental Kuznets Curve (EKC) as well as Pollution Haven Hypothesis (PHH) for Malaysia using a latest annual dataset for the period 1971 until 2019. The study used Bound test to determine the impact of FDI and other selected macroeconomic variables on environmental quality proxied by Carbon emission (CO2). The outcomes shows that the country showcased the U shaped of EKC and higher FDI inflows has worsening the country’s environmental pollution. These outcomes posit a bad alarm for the policymakers of the country to be more aware on the consequences of development that cause higher carbon emissions release and how MNC in the country contribute more emissions with make the scenario worsen. Heavy environmental rules should be imposed to foreign investors and the country need to be directing their economic development by following the principles set out by United Nation in pursing sustainable development.

Kunal Sen · Matthew Tyce ·Structural Change and Economic Dynamics ·2019

Both Malaysia and Thailand were seen to be part of the miracle growth economies of East Asia and fast moving into high income status in the early 1990s. Following the Asian Financial Crisis (AFC) of the mid 1990s, both countries have observed prolonged growth slowdowns. In this paper, we offer a political economy explanation of the growth slowdown in Malaysia and Thailand in their post AFC phases. We argue that the nature of the political settlement in these two countries determined a growth strategy that was predicated on offering open deals in the export-oriented manufacturing sector that were accessible to most firms, while at the same time, offering closed deals to politically connected firms in the natural resource and services sectors. As the political settlement moved to a vulnerable authoritarian one in both countries, such a dualistic deals strategy became patronage based over time and detrimental to growth.

Yusniliyana Yusof · Kaliappa Kalirajan ·Journal of Economic Studies ·2020

The study contributes to the aim of regional development policy in reducing regional disparities, by examining the spatial balance in socioeconomic development across the states of Malaysia based on composite development index (CDI). Besides, the study has attempted to understand the issues in the development gaps across Malaysian states by evaluating the factors that explain the variation in economic growth. This study uses three-stage least squares (3SLS) and bootstrap sampling and estimation techniques to examine the factors that explain the variations in the growth of development across the states in Malaysia. The analysis involves 13 states in Malaysia (Johor, Melaka, Negeri Sembilan, Pulau Pinang, Perak, Perlis, Selangor, Kedah, Kelantan, Pahang, Terengganu, Sabah and Sarawak) from 2005 to 2015. The pattern in the spatial socioeconomic imbalance demonstrates a decreasing trend. However, the development index reveals that the performance of less developed states remained behind that of the developed states. The significant factors in explaining the variation in growth across the Malaysian states are relating to agriculture, manufacturing, human capital, population growth, Chinese ethnicity, institutional factors and natural resources.

Sitraselvi Chandren · Ayoib Che Ahmad · Santhirasegaran Nadarajan ·International Journal of Supply Chain Management ·2018

The implementation of Goods Service Tax (GST) in business processes requires firm to revise their business policies and practices particularly on price setting and cash flow operation that may possibly influence the operating performance. Thus, the purpose of this study is to investigate the impact of GST on operating performance. This study investigated 265 Malaysian listed firms operating performance (profitability: sales growth –SG, profit after tax-PAT, return on asset (ROA), liquidity: operating cash flows (OCF) and current ratio –CR) from year 2014 (before), 2015 (during) and 2016 (after) GST implementation period using the paired t-test. The SG have shown decreased during the GST implementation period, subsequently improved after the GST implementation period. The CR has exhibited a remarkable improvement during and after GST implementation period. The SG and CR results validate the firms are able to maintain the operating performance even with minimal reduction is witnessed for PAT, ROA and OCF during and after GST implementation. This study contributes to all stakeholders that GST do not necessarily influence the firms negatively, but allows the management of the firm in making effective decision for the operating business processes and supply chain for sustaining the firm value. In sum, this study finds that GST is a business friendly tax system for firms with effective operating performance to support the country economic development.

My-Linh Nguyen · Toan Ngoc Bui ·Economies ·2021

This paper focuses on examining the nonlinear impact of trade openness (TO) on economic growth (EG) in the Asean-6 countries (Indonesia, Malaysia, Thailand, Singapore, Philippines, and Vietnam). In order to achieve the set research objectives, the authors estimate the research model through the fixed-effect panel threshold approach. Unlike previous studies, this paper finds that there is a nonlinear impact of TO on EG, whereby TO has two threshold values. Specifically, before the first threshold value, TO plays an important role in boosting EG. However, this impact level decreases gradually when TO exceeds this threshold value. In particular, when exceeding the second threshold value, the impact of TO on EG is still positive but has a relatively low value. The research results show that if TO increases to a high level (beyond the threshold value) without combining with other complementary policies, this does not encourage high-efficiency EG. In addition, this study also shows that EG is positively affected by domestic investment and negatively affected by financial crisis. The findings in this paper are of great importance for the Asean-6 countries as well as researchers.

Saeed Solaymani ·Journal of Economic Studies ·2020 ·JEL: H2, H24, H25, O15

This study is the first attempt to analyze the effectiveness of recent two major tax policies, the reductions in personal and corporate income taxes and a rise in indirect tax and their combine, under both balanced and unbalanced budget conditions, on the economy and social aspects of Malaysia. This study uses a computable general equilibrium model to investigate the impacts of all simulation scenarios on the key macro and micro indicators. Further, based on the 2012 Malaysia Household Income and Expenditure Survey, it uses a micro-data with a significant number of households (over 56,000 individuals) to analyze the impacts of tax policies on poverty and income inequality of Malaysian. Simulation results show that, under the balanced budget condition, personal and corporate income tax reductions increase economic growth, household consumption, and investment, while the rise in indirect tax has adverse impacts on these variables. However, in the unbalanced budget condition, all tax policies, except indirect tax policy, reduce real GDP and investment in the economy and the indirect tax policy has insignificant impacts on all indicators. All policy reforms reallocate resources, especially labor, in the economy. In both budget conditions, the reductions in corporate and personal income taxes, particularly the corporate income tax, decrease poverty level of Malaysian households. Results also indicate that both tax policies are unable to influence income inequality in Malaysia.

Chia-Guan Keh · Pei-Tha Gan · Yan-Teng Tan · Fatimah Salwa Binti Abd. Hadi · Norasibah Binti Abdul Jalil ·International Journal of Sustainable Economy ·2022

Determining the relationship between financial development and economic growth is important to make precise projections of economic growth. As most of these studies rely on a symmetric relationship, they can lead to misleading policy implications. To overcome this shortcoming, this paper uses a technique involving an asymmetric relationship. This paper examines the asymmetric relationship between financial development and economic growth in Malaysia from 1980 to 2017 using a nonlinear autoregressive distributed lags model. The banking sector and stock market development have been employed as indicators of financial development. The findings suggest that the asymmetric relationship between banking sector development and economic growth exists in the long-run. Banking sector development shows no asymmetric relationship with economic growth in the short-run, while stock market development does not present any asymmetric relationship with economic growth in the short and long-terms. The study infers that the banking sector development is an essential engine of growth promotion. Policymakers should consider banking and stock market development for better policy decision-making.