Testing regional convergence hypothesis using time series data: Sectoral Evidence

Almost five decades, disparity in income across states in Malaysia continues to be a matter of concern. The existence of regional inequalities and the prospects that these inequalities may widen were recognized by the Malaysian government. The nine volumes of the 5-Year Malaysia Plans reflecs the sincerity of the Malaysian government in eradicating if not elevating the program of regional or states imbalances. The objective of the present study is to investigate stochastic convergence among three region (Peninsular Malaysia, Sabah and Sarawak) in Malaysia using sectoral data. Using annual data for the period 1968 to 2003 we found that Malaysian's sectoral data exhibit and week convergence between regions

Demand Analysis of FAFH Homes' in Malaysia

Despites the importance of FAFH, limited attempt has been made to study the economics of this emerging cultural change. This may be due to underestimation of importance of FAFH, especially when the food sector is mostly studied at aggregate level. The general objective of this study is to analyze FAFH consumption in Malaysia. Specifically, the objective of this research is to analyze the determinants of FAFH demand and examine how socioeconomic factors of consumers have contributed to FAFH. The control variables for the study provided expected coefficients that are significantly different than zero. As the level of development increase, household structure change simultaneously with income increase that lead to an increase in FAFH expenditure. This study has shown that FAFH has the propensity to increase with an increase in income. FAFH high-income elasticity provides a good indicator for FAFH industry demand

Regional income disparities in Malaysia: A stochastic convergence analysis

For the last four decades, income disparities across states in Malaysia continue to be a matter of concern. The existence of regional inequalities and the prospect that these inequalities may widen were recognized by the Malaysian government. The eight volumes of the 5-Year Malaysia Plan reflect the determination of the Malaysian government in alleviating if not totally eradicating the problem of regional or state level imbalances. The recent Ninth Malaysia Plan has again emphasized regional development policies in bridging the gap of regional disparities for the next five years. Using annual data for the period 1965 to 2003, the stochastic convergence definition suggested by Bernard and Durlauf (1995), univariate unit root tests suggested by Oxley and Greasley (1995) and panel unit root testing procedures proposed by Levin et al. (2002), Im et al. (1997) and Maddala and Wu (1999), our findings strongly support the stochastic convergence of catching up hypothesis for six regions in Malaysia. An important implication of this study is that Malaysia’s regional development policies, on average, have had a positive impact on the per capita income in all of the six regions

Defense spending and economic growth in Asian economies: A panel error-correction approach

Hoping to contribute to the existing pool of literature, this paper examines the relationship between military expenditure and economic growth in selected Asian countries for the period 1989 to 2004. Our panel unit root test suggests that real GDP per capita and military expenditures are I (1) processes, while the Larsson et al. (2001) panel cointegration test indicates that economic growth and military expendirues are cointegrated. Finally, applying the panel error-correction technique proposed by Pesaran et al. (1999), our empirical results show that defense spending and economic growth in the Asian countries under the period of study are not related

Regional Income Disparity In Malaysia: Is Sabah Converging, Catching-Up With Or Falling Behind Other States In Malaysia?

Whether poor economies tend to converge towards rich ones or else to diverge over time is an issue that has attracted the attention of policymakers and academics alike for some decades. Economic convergence or divergence is a topic of considerable interest and debate, not only for validating or otherwise the two leading and competing growth models (the neoclassical and the endogenous growth approaches) but also for its policy-oriented implications. In Malaysia, the issue of economic convergence is also much debated. Despite the various Malaysia Plans for the past three decades, regional disparity between states remains. Thus, the objective of the present paper is to address the question whether the state of Sabah has been converging, catching-up or falling behind the other states in Malaysia. Using annual data for the period 1965 to 2003, our univariate unit root test result suggest that the state of Sabah has been catching-up with other states except with the state of Terengganu. In this respect, the local government has an important role to play in enhancing growth by providing stable economic environment for investment and other productive economic activities. This will ensure convergence can take place in the future

Defense spending and economic growth in Asian economies: A panel error-correction approach

Hoping to contribute to the existing pool of literature, this paper examines the relationship between military expenditure and economic growth in selected Asian countries for the period 1989 to 2004. Our panel unit root test suggests that real GDP per capita and military expenditures are I (1) processes, while the Larsson et al. (2001) panel cointegration test indicates that economic growth and military expendirues are cointegrated. Finally, applying the panel error-correction technique proposed by Pesaran et al. (1999), our empirical results show that defense spending and economic growth in the Asian countries under the period of study are not related

Empirical Evidence on the Long-Run Neutrality Hypothesis Using Divisia Money

By employing Fisher and Seater’s (1993) long-run neutrality test, the researchers tested the monetary neutrality proposition in Singapore for the period of 1980-2009. Empirical findings show that monetary neutrality does not hold in Singapore when both the simple-sum money and Divisia money are employed. As both the simple-sum and Divisia monetary aggregates are non-neutral, monetary authorities may consider their use as a monetary policy tool affecting real economic activity

Testing Nonlinear Convergence in Malaysia, 1965-2003

The purpose of the present paper is to examine income convergence in Malaysia by using the nonlinear unit root test due to Kapetanios et al. (KSS, 2003) and extended by Chong et al. (CHLL, 2008) to permit the test of long-run convergence and catching-up hypotheses. We apply the KSS-CHLL nonlinear unit root for the test of nonlinear convergence between thirteen states with respect to Wilayah Persekutuan (the riches state) of Malaysia for the period 1965 to 2003. Generally, our results suggest that out of the thirteen states, only Kedah, Negeri Sembilan, Perak, Perlis and Selangor support the long-run convergence hypothesis while Johor, Kelantan, Melaka, Pahang and Penang suggest catching-up. Lastly, Sabah, Sarawak and Terengganu indicate income divergence from Wilayah Persekutuan

Testing Nonlinear Convergence in Malaysia

The purpose of the present paper is to examine income convergence in Malaysia by using the nonlinear unit root test due to Kapetanios et al. (KSS, 2003) and extended by Chong et al. (CHLL, 2008) to permit the test of long-run convergence and catching-up hypotheses. We apply the KSS-CHLL nonlinear unit root for the test of nonlinear convergence between thirteen states with respect to Wilayah Persekutuan (the riches state) of Malaysia for the period 1965 to 2003. Generally, our results suggest that out of the thirteen states, only Kedah, Negeri Sembilan, Perak, Perlis and Selangor support the long-run convergence hypothesis while Johor, Kelantan, Melaka, Pahang and Penang suggest catching-up. Lastly, Sabah, Sarawak and Terengganu indicate income divergence from Wilayah Persekutuan