Export growth slowdown and currency crisis: the Malaysian experience

Anita Daraisami

Applied Economics, 2004, vol. 36, issue 17, 1947-1957

Abstract: A slowdown in export growth occurred in all East Asian economies that were affected by the Asian currency crisis. Misaligned exchange rates have been widely cited as a cause of the slowdown. In the Malaysian context at least a vulnerability to the downturn in the electronic cycle could also be a major factor leading to poor export performance. Using the US/yen dollar rate as a proxy for exchange rate misalignment and US total new orders for electronics as a proxy for global electronics demand, cointegration analysis was used to establish the likely causes of a slowdown in Malaysia's export performance. Empirical results suggest that a unique long-run relationship exists between all three variables. The policy implications of these results including exchange rate monitoring and export diversification are discussed in the conclusion.

Date: 2004
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DOI: 10.1080/0003684042000236039

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