THE IMPACT OF EXPORT DIVERSIFICATION ON THE ECONOMIC GROWTH IN MALAYSIA

Abstract

This study aims to analyse the impact of export diversification on the economic growth in Malaysia in both the short and long run. Computed data of degree of specialisation and diversification (DSD) in Malaysia from 1987 to 2017 were utilised. Furthermore, this study takes into consideration other determinants such as foreign direct investment and human capital to examine their impacts on the economic growth in Malaysia. The findings indicate that Malaysia is experiencing diversification in its export basket. Furthermore, all the independent variables were found to be positive and significant in relation to economic growth in the long run. However, there was no short-run relationship found throughout the studies amongst the dependent and independent variables. The research findings suggested that Malaysia should diversify further in terms of export commodities and cultivate a larger partnership socially and economically with the rest of the world.