The impact of trade openness on manufacturing Sector performance: evidence from Malaysia
Trade openness plays a vital role in boosting the production of the manufacturing sector. Two opposing perspectives identify trade-growth nexus. One posits that trade openness will stifle industrial productivity while the opposing view believes that manufacturing productivity can be enhanced by a...
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
School of Economics, Finance and Banking, Universiti Utara Malaysia
2021
|
| Subjects: | |
| Online Access: | https://repo.uum.edu.my/id/eprint/28181/1/JES%203%201%202021%2012%2022.pdf |
| _version_ | 1803629419921670144 |
|---|---|
| author | Sun, Fu Neoh Tian, So Lai |
| author_facet | Sun, Fu Neoh Tian, So Lai |
| author_sort | Sun, Fu Neoh |
| collection | UUM |
| description | Trade openness plays a vital role in boosting the production of the manufacturing sector. Two
opposing perspectives identify trade-growth nexus. One posits that trade openness will stifle
industrial productivity while the opposing view believes that manufacturing productivity can
be enhanced by a trade liberalization regime. This study investigates the instantaneous and jointly dynamic effect of trade openness along with macroeconomic variables (i.e., Malaysian
exchange rate and average lending rate) and the event of economic crises on manufacturing
sector performance in Malaysia using data from 1981 to 2016. This study employed a distributed lag model. The Augmented Dickey-Fuller (ADF) unit root test was adopted to determine the stationarity of time series data. The empirical results revealed that the effect of both instantaneous and the jointly dynamic effect of the percentage change in trade openness
on manufacturing production growth in Malaysia are positive and significant. However, the effects of the percentage change in exchange rate and percentage change in average lending rate are insignificant. Economic crisis has a significant negative impact on Malaysian manufacturing production growth. Therefore, the results strongly recommend that the direction of trade policy in Malaysia should be formulated based on outward-looking strategies. |
| first_indexed | 2024-07-04T06:37:34Z |
| format | Article |
| id | uum-28181 |
| institution | Universiti Utara Malaysia |
| language | English |
| last_indexed | 2024-07-04T06:37:34Z |
| publishDate | 2021 |
| publisher | School of Economics, Finance and Banking, Universiti Utara Malaysia |
| record_format | dspace |
| spelling | uum-281812021-02-11T01:48:22Z https://repo.uum.edu.my/id/eprint/28181/ The impact of trade openness on manufacturing Sector performance: evidence from Malaysia Sun, Fu Neoh Tian, So Lai HC Economic History and Conditions Trade openness plays a vital role in boosting the production of the manufacturing sector. Two opposing perspectives identify trade-growth nexus. One posits that trade openness will stifle industrial productivity while the opposing view believes that manufacturing productivity can be enhanced by a trade liberalization regime. This study investigates the instantaneous and jointly dynamic effect of trade openness along with macroeconomic variables (i.e., Malaysian exchange rate and average lending rate) and the event of economic crises on manufacturing sector performance in Malaysia using data from 1981 to 2016. This study employed a distributed lag model. The Augmented Dickey-Fuller (ADF) unit root test was adopted to determine the stationarity of time series data. The empirical results revealed that the effect of both instantaneous and the jointly dynamic effect of the percentage change in trade openness on manufacturing production growth in Malaysia are positive and significant. However, the effects of the percentage change in exchange rate and percentage change in average lending rate are insignificant. Economic crisis has a significant negative impact on Malaysian manufacturing production growth. Therefore, the results strongly recommend that the direction of trade policy in Malaysia should be formulated based on outward-looking strategies. School of Economics, Finance and Banking, Universiti Utara Malaysia 2021 Article PeerReviewed application/pdf en https://repo.uum.edu.my/id/eprint/28181/1/JES%203%201%202021%2012%2022.pdf Sun, Fu Neoh and Tian, So Lai (2021) The impact of trade openness on manufacturing Sector performance: evidence from Malaysia. Journal of Economics and Sustainability, 3 (1). pp. 12-22. ISSN 2637-1294 http://e-journal.uum.edu.my/index.php/jes/issue/view/555 |
| spellingShingle | HC Economic History and Conditions Sun, Fu Neoh Tian, So Lai The impact of trade openness on manufacturing Sector performance: evidence from Malaysia |
| title | The impact of trade openness on manufacturing
Sector performance: evidence from Malaysia |
| title_full | The impact of trade openness on manufacturing
Sector performance: evidence from Malaysia |
| title_fullStr | The impact of trade openness on manufacturing
Sector performance: evidence from Malaysia |
| title_full_unstemmed | The impact of trade openness on manufacturing
Sector performance: evidence from Malaysia |
| title_short | The impact of trade openness on manufacturing
Sector performance: evidence from Malaysia |
| title_sort | impact of trade openness on manufacturing sector performance evidence from malaysia |
| topic | HC Economic History and Conditions |
| url | https://repo.uum.edu.my/id/eprint/28181/1/JES%203%201%202021%2012%2022.pdf |
| work_keys_str_mv | AT sunfuneoh theimpactoftradeopennessonmanufacturingsectorperformanceevidencefrommalaysia AT tiansolai theimpactoftradeopennessonmanufacturingsectorperformanceevidencefrommalaysia AT sunfuneoh impactoftradeopennessonmanufacturingsectorperformanceevidencefrommalaysia AT tiansolai impactoftradeopennessonmanufacturingsectorperformanceevidencefrommalaysia |