Investigating exports performance between Malaysia and OIC member countries from 1997-2012

Abstract

The purpose of this study is to examine the impact of macroeconomic factors such as GDP, CPI, TRGDP and ER on exports between Malaysia and other OIC countries using a panel data for the period of 1997-2012. The panel unit root tests have been applied to confirm the stationarity and level of integration. The overall unit root tests (Dickey & Fuller, 1979; Im, Pesaran, & Shin, 2003; Levin, Lin, & James Chu, 2002) result shows that all the variables are stationary at level and become non-stationary after taking first difference. The Kao cointegration test results approved the cointegration among the panel of proposed countries. After confirm the stationarity level and cointegration FMOLS test is employed to analyze whether a long run relationship between variables exist. The results obtained show that only GDP, TRGDP and ER have significant effect on exports. In examining the short-run relationships among variables, a panel ECM is the applied and it is observed that only ER and TRGDP have positive effect on exports. Results from this study can be used as guidance for policy makers on exports where government can give more attention on both ER and TRGDP to influence exports in the short run.