The Relationship between Crime and Economic Growth in Malaysia: Re-Examine Using Bound Test Approach

Abstract

This study is an attempt to re-examine the relationship between crime and economic growth in Malaysia for the periods of 1980 to 2013. The ARDL method was used to establish the long-run relationship as well as the direction of causation between variables. The standard model, the bivariate relationship was estimated. The models exhibit strong evidence on long-run cointegration. The impact of economic growth towards crime in the long run was found to be positive and statistically significant. In the short run, bidirectional causation between crime and economic growth was also found to be significant. This study is consistent with the economist arguments that good economies tend to create more crime, and the opposite occurs during bad economies. Thus, government should not only aim for economic growth, but also to provide more employment opportunities, increase wage rate, and provide more basic necessities to every citizen especially during good times as well as tighten the enforcement of crime laws so that crime will be continuously reduced and under control.