EXAMINING THE DRIVERS OF MALAYSIA’S PEPPER EXPORT COMPETITIVENESS: EVIDENCE FROM AN AUTOREGRESSIVE DISTRIBUTED LAG (ARDL) FRAMEWORK

Abstract

This research explores the key drivers shaping the export competitiveness of Malaysian pepper from 2001 to 2022, utilizing the Autoregressive Distributed Lag (ARDL) framework. Competitiveness is assessed through the Revealed Comparative Advantage (RCA) index, with particular attention to the roles of Gross Domestic Product (GDP), Foreign Direct Investment (FDI), the Real Effective Exchange Rate (REER), and population dynamics. The long-run analysis indicates that both GDP and REER exert a statistically significant and positive influence on Malaysia’s pepper export performance. In contrast, FDI is associated with a negative long-term effect, while population changes appear to have no meaningful impact over the same horizon. Short-run estimates reveal more nuanced relationships: FDI initially dampens competitiveness before contributing positively, and REER demonstrates a shifting influence over time. Population, though insignificant in the long run, emerges as a supportive factor in the short term. These findings highlight the importance of fostering sustained economic growth, maintaining exchange rate stability, and strategically channelling FDI to reinforce Malaysia’s competitive edge in the global pepper trade.