The impact of government debt on output growth, private investment and human capital in Malaysia

It is important for every country to evaluate the role of government debt on economic growth and macroeconomic factors, especially in developing economies. Some endogenous growth theories predict that if government debt at moderate level is spent on development expenditures such as public infrastructure and human capital – as is the case in Malaysia – it can crowd-in private investment, human capital and economic growth. This paper aims to examine the effect of government debt on output growth, private investment and human capital in Malaysia during the period of 1985-2016, employing Vector Error Correction modeling (VECM) and Generalized Impulse Response (GIR). The result shows that government debt generates positive response in GDP growth and human capital in the long run although not significant. Moreover, the effect on private investment is null. This finding supports prudent debt management in Malaysia. Accordingly, the policy implication would be to focus on more efficient usage and allocation of the government funds, based on the country’s priorities, while maintaining the debt within the dominant past range

Crazy rich Asian countries? The impact of FDI inflows on the economic growth of the economies of Asian countries: evidence from an NARDL approach

FDI inflows are often regarded as the engine of economic growth, where an increase in FDI leads to higher productivity and higher international trade. Recognising that financial crises, political instability and trade wars may shape the asymmetric behaviour of FDI inflows, this paper utilises the NARDL model by Shin et al. (2014) over the period 1970-2017 to examine the asymmetric cointegration between the FDI inflows and economic growth of three economic nation groups in the Asian region. The empirical results indicate that 1) there is significant evidence of the asymmetric effects of FDI inflows on the economic growth of Asian developing countries. More specifically, an increase in FDI inflows tends to lead to an increase in economic growth, while a reduction in FDI inflows is detrimental to economic growth. 2) a higher human capital index and capital stock in the host country promotes economic growth

Determinants of service export in selected developing Asian countries

This paper attempts to empirically examine the determinants of service export in selected developing Asian countries (China, Hong Kong, South Korea, India, Iran, Indonesia, Malaysia, Philippines, Singapore, Thailand, Kuwait, Saudi Arabia and Turkey). The study conducted a static linear panel data analysis on annual data covering the period of 1985-2012. The main finding indicates that exchange rate, foreign income, foreign direct investment (FDI), the value added by services and communication facilities are likely to influence services exports in the selected developing Asian countries. This suggests that these countries have the opportunity to compete globally by exporting services, provided that they are able to exploit and enhance their potential by focusing on the significant and relevant indicators

Liberalization of retail sector and the economic impact of the entry of foreign hypermarkets on local retailers in Klang Valley, Malaysia

The primary purpose of this research is to investigate the impact of liberalization of retail sector via the presence of foreign hypermarkets in Malaysia on local retailers. Both quantitative and qualitative methods (survey and interviews) were used to collect and analyze the data. A total of 135 questionnaires were completed. The findings from the survey reveal that the entry of foreign hypermarkets in a town often affects the business environment of the local retail businesses. It is found that the newly established foreign hypermarkets tend to acquire much larger market share from the existing local businesses. The survey found that some businesses benefited from the presence of foreign hypermarkets (especially complementary type of retail businesses) while others do not (specifically those retail businesses that are related to groceries)

Foreign direct investments (FDI) and economic growth: empirical evidence from Southern Africa Customs Union (SACU) countries

Foreign direct investment (FDI) has been regarded as one of the important factors that stimulate the economic growth in most of the developing countries. However, fewer studies have explored the issue in the case of African region. This study examines the impact of FDI on economic growth for the Southern Africa Custom Union (SACU) countries namely; Botswana, Lesotho, Namibia, South Africa and Swaziland. Employing panel data from the period of 1980-2010 and using Dynamic Ordinary Least Squares (DOLS), the findings reveals satisfactory evidence that there is a positive and significant impact of FDI on the economic growth for the SACU countries

Service export and economic growth in the selected developing Asian countries

Services trade is regarded as a new source of income, especially for developing countries. Even though services trade only represent 20.2 per cent (2010) to total world trade, interestingly, recent trend shows that the share for developing countries in services trade increased to 32 per cent (2010) as compared to only 20 per cent in 1990. Moreover, the share of service export to total exports also increased from 18 per cent in 1990 to 30 per cent in 2010. Although, most of the developing countries are still net importers of services, there is a widespread belief among scholars and policy makers that there is great potential for services exports to grow further as new source of income for developing countries. Thus, the main purpose of this study is to examine the impact of service export on economic growth using panel dynamic OLS (DOLS) in selected Asian countries (i.e. China, Hong Kong, South Korea, India, Iran, Indonesia, Malaysia, Philippines, Singapore, Thailand, Kuwait, Saudi Arabia and Turkey). Annual data covering the period from 1985 to 2012 was utilized. The findings indicate that all of the macroeconomic variables tested are co-integrated in the long run. Service export also has a significant and positive impact on economic growth. The findings implies that the Asian developing countries should focus on formulating appropriate policy measures to enhance the performance of services sector and service export to stimulate the economic growth

Intellectual Property Rights (IPRS) and unemployment: empirical evidence from developing economies

Developing countries rely on imitation and innovation to boost their economic growth. The debate on innovation and imitation has been the focus of empirical research with the implementation of strengthening Intellectual Property Rights (IPRs). This is because IPRs may affect developing countries in terms of employment and economic growth. Theoretical studies have proven the relationship, but empirical studies on this topic are scarce. Thus, this study aims to examine the effect IPRs on unemployment in selected developing economies. System-GMM estimator is adopted by utilizing panel data for a sample of 47 developing countries from 2008-2014. This study considers the direct effect of IPRs protection on unemployment. The empirical analysis shows that stronger IPRs protection escalates unemployment in these countries as evidenced by a positive and significant relationship between these variables. As most of the technology by developing countries rely on imitation activities thus, stronger IPRs protection increases unemployment and the effect of IPRs protection on unemployment are positive

Intersectoral linkages of Malaysian Batik Industry: an application of input- output analysis

This paper examines the contribution of batik industry to the national economy through the idea of inter-industry linkages. Batik industry’s contribution to Malaysian economy is through the performances of the manufacturing in textiles, the development of tourism with being high-valued heritage products, and to the total Malaysian craft sales. The local batik entrepreneurs also require local traders of raw materials for producing batik from abroad to the local market. These shows that batik not only plays a vital role in fostering heritage and cultural, but it has economic values via its contribution to the other production sectors in economy. However, it is difficult to measure the economic contribution of the batik industry because there is no specific data on this industry in the SME Annual Report and the Malaysian Handicraft Annual Report. Thus, we used data from Malaysian Input-Output Table 2010 to measure the industrial linkages of batik industry with other production sector in Malaysian economic structure. It is found that batik industry has backward linkages with other production sectors. This result implies that stimulating growth in the output of the batik industry would benefit other sector through positive spillover effects due to the higher demand on the output of other sectors (e.g. textiles) to be used as inputs by batik firms in producing batik

Income inequality and crime: evidence from a dynamic panel data approach

Motivated by the inconclusive evidence from previous empirical studies on the nexus between crime and income inequality, this study investigates the effect of income inequality on crime using the dynamic panel system generalized method of moments (GMM) for the period of 1989-2012. The study also provides new evidence that sheds light on the role that institutional quality plays in moderating the relationship between income inequality and crime. The empirical results indicate that income inequality is positively associated with crime. However, better institutional quality has a negative moderating effect on the relationship between income inequality and crime. The findings of the marginal effect reveal that the effect of income inequality on crime is significant at the mean level of the institutional quality variable

Composite trade shares measurement for trade openness on inflation among selected developing countries

This paper examines the nexus between trade openness and inflation among 42 selected developing countries between 1985 and 2014 using five years averages to validate the Romer hypothesis for the role played by trade openness in influencing inflation. As suggested by Romer hypothesis, trade openness has negative relationship with inflation yet there is no empirical consensus between trade openness and inflation. This paper follows the newly developed measurement proposed by Squalli and Wilson (2011) to consider a multidimensional index, composite trade shares, to measure for trade openness. The results from system GMM estimation indicated the rejection of Romer hypothesis when using Composite trade shares measurement for trade openness but support Romer hypothesis when using the trade shares measurement. The rejection of Romer’s hypothesis using the composite trade shares measurement suggests that policymakers need to aware of inflation following greater trade openness. Apart from that, income redistribution and greater government expenditures are important in reducing the negative impact brought by greater trade openness