Trade openness and manufacturing growth in Malaysia

V.G.R. Chandran and Munusamy
Authors registered in the RePEc Author Service: Chandran V G R ()

Journal of Policy Modeling, 2009, vol. 31, issue 5, 637-647

Abstract: This study investigates the long-run relationship between trade openness and manufacturing growth and further assesses the causal relationship between these variables. Contrary to some scholars belief that at national level, openness does not contribute to growth in Malaysia, our sector specific analysis suggest otherwise. In this aspect, we believe that in any attempt to establish relationship between openness and growth, the analysis should be sector specific since it is more relevant as well as assures a meaningful insight for policy makers. The results suggest that in the long-run, trade openness is positively related to manufacturing growth in Malaysia. Furthermore, the results also suggest that openness should be viewed as the long term policy initiative for the sector to benefit. Therefore, the policy direction for Malaysian manufacturing sectors should focus on long term trade openness policies. Nevertheless, to ensure sustainability, emphasis should be placed on how (which manufacturing sub-sectors) or when openness is actually important. Importantly, policy makers and scholars should understand that leveraging the benefits of openness also depend on whether the liberalized sector has the comparative advantage.

Keywords: Trade; openness; Autoregressive; distributed; lag; Manufacturing; growth; Granger; causality (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:31:y:2009:i:5:p:637-647

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