Determinants of Export Competitiveness of Agricultural Products in Malaysia
Abstract
This study intends to evaluate the export competitiveness of agricultural products using the data of 186 agricultural commodities in Malaysia for the period ranging from 1988 to 2014. Besides, this study engages in the total export of the world with Standard International Trade Classification Revision Three-SITC Revision 3 (5-digits code) to analyse the index of comparative advantage of agricultural commodities in Malaysia. In addition, the study employs Balassa (1965) index of Revealed Comparative Advantage (RCA) to measure competitiveness. The findings show that 56 commodities have comparative advantage. Apart from that, this study also empirically examines the determinants of competitiveness which are commodities price, GDP per capita, labour participation and capital formation. The results of cointegration tests estimation indicates that there is a long-run relationship between the variables under study. The outcomes denote that price of commodities, GDP per capita and crises in 2008 have negative association while labour participation and capital formation are positively relatedly to competitiveness. The results also specify that there is a short-run dynamic impact on competitiveness with the variables. This study suggests that the government should consider intensifying the current economic policy through focusing on downstream products by taking the benefit of its comparative advantage in upstream industries to increase competitiveness.
References
Abdul Rahim, N. A. Z. (2014). An Overview of Fruit Supply Chain in Malaysia. Jurnal Mekanikal, 37, 36-46.
Abdychev, A., Jirasavetakul, L. F., Jonelis, A., Leigh, L., Moheeput, A., Parulian, F., Stepanyan, A., & Mama, A. T. (2014). Increasing Productivity Growth in Midle Income Countries. (IMF Working Paper No. 15/2). International Monetary Fund. https://www.imf.org/en/Publications/WP/Issues/2016/12/31/Increasing-Productivity-Growth-in-Middle-Income-Countries-42595 https://doi.org/10.5089/9781484328439.001
Adelman, I. (2001). Fallacies in Development Theory and Their Implications for Policy. (Working Paper No. 887). Department of Agricultural and Resource Economics and Policy Division of Agricultural and Natural Resources.
Aini, Z. N., Roda, J. M., & Fauzi, P. A. (2010). Comparative advantage of Malaysian wood products in the European market. Paper presented at the National Postgraduate Seminar (NAPAS 2010), Kuala Lumpur, Malaysia.
Ariff, M. (2005). The Drivers of Competitiveness in Malaysia. Malaysian Institute of Economic Research, Kuala Lumpur, Malaysia.
Arip, M. A., Lau, S. Y., & Thien, S. F. (2013). Assessing the Competitiveness of Malaysia and Indonesia Palm Oil Related Industry. World Review of Business Research, 3(4), 138-145.
Aziz, M. I. A. (2013). Oil Price Fluctuations and Changing Comparative Advantage. Sosyoekonomi Journal, 2, 108-130.
Balassa, B. (1965). Trade Liberalization and Revealed Comparative Advantage. Manchester School of Economics and Social Studies, 33, 99-123. https://doi.org/10.1111/j.1467-9957.1965.tb00050.x
Balassa, B. (1989). Comparative Advantage, Trade Policy and Economic Development. New York: Harvester Wheatsheaf.
Bank Negara Malaysia. (BNM) (2015). Economic and Financial Developments in the Malaysian Economy in the First Quarter of 2015. Developments in the Malaysian Economy. Quarterly Bulletin. Kuala Lumpur.
Bank Negara Malaysia. (BNM) (2016). Economic and Financial Developments in the Malaysian Economy in the First Quarter of 2016. Developments in the Malaysian Economy. Quarterly Bulletin. Kuala Lumpur.
Bender, S., & Li, K. W. (2002). The Changing Trade and Revealed Comparative Advantages of Asian and Latin American Manufacture Exports. Yale University, Economic Growth Center. Discussion Paper Series, No.843.
Bhattacharya, R. (2011). Revealed Comparative Advantage and Competitiveness: A Case Study for India in Horticultural Products. International Conference on Applied Economics.
Choong, C. K., Yusop, Z., Law, S. H., & Liew, V. K. S. (2003). Financial Development and Economic Growth in Malaysia: A Re-assessment from Bound Test Approach. Labuan Bulletin of International Business and Finance, Inaugural issues, 53-63.
Choong, C. K., Yusop, Z., Law, S. H., & Liew, V. K. S. (2005). Financial Development and Economic Growth in Malaysia: The Stock Market Persprective. Investment Management and Financial Innovations, 2(4), 105-115.
Cvetković, M., & Petrović-Ranđelović, M. (2017). The Analysis of Agricultural Products Export Competitiveness of the Republic of Serbia based on the RCA Index. Economic Themes, 55(3), 399-420. https://doi.org/10.1515/ethemes-2017-0022
Department of Statistics Malaysia. (DOSM) (2016). Gross Fixed Capital Formation 2010-2015. https://www.statistics.gov.my/index.php?r=column/pdfPrev&id=cDVaZFp0elRCTVFiUGNIVmovU3pTQT09
Diao, X., Hazell, P., Resnick, D., & Thurlow, J. (2007). The Role of Agriculture in Development. Implications for Sub-Saharan Africa. International Food Policy Research Institute: Washington, D.C., USA.
Economic Planning Unit. (EPU) (2015). Eleventh Malaysia Plan 2016-2020. Chapter 1: Anchoring Growth on People. Kuala Lumpur: Malaysia. Government Printing Office.
Edeme, R. K., Ifelunini, I. A., & Nkalu, N. C. (2016). A Comparative Analysis of the Impact of Agricultural Exports on Economic Growth of ECOWAS Countries. Acta Oeconomica Pragensia, 24(5), 31-46. https://doi.org/10.18267/j.aop.556
European Commission. (2007). EU Industrial Structure 2007. http://ec.europa.eu/enterprise/policies/industrialcompetitiveness/competitiveness-analysis/eu-industrial-structure/index_en.htm
Food and Agriculture Organization of the United Nations. (FAO) (2012). World Food and Agriculture. Rome: Economic and Social Development Department.
Ismail, R., & Yuliyusman, F. (2014). Foreign Labour on Malaysian Growth. Journal of Economic Integration 29(4), 657-675. https://doi.org/10.11130/jei.2014.29.4.657
Joshi, P. K., Gulati, A., Birthal, P. S., & Tewari, L. (2004). Agriculture Diversification in South Asia: Patterns, Determinants and Policy Implications. Economic and Political Weekly, 39(24), 2457-2467.
Le, Q. P. (2010). Evaluating Vietnam's Changing Comparative Advantage Patterns. ASEAN Economic Bulletin, 27(2), 221-230. https://doi.org/10.1355/ae27-2e
Lembaga Getah Malaysia. (2011). The Malaysian Natural Rubber Industry. http://www.lgm.gov.my/GreenMaterial/TheMalaysianNRIndustry.pdf
Madsen, J. B., & Ang, J. B. (2013). The Asian Growth Miracle: Factor Accumulation, the Demographic Transition, and R and D Driven Growth. (Monash Economics Working Papers No 23-13). Department of Economics, Monash University.
Malaysia Palm Oil Council. (2013). Malaysia Palm Oil Industry. http://www.mpoc.org.my/Malaysian_Palm_Oil_Industry.aspx
Malaysia Productivity Corporation. (MPC) (2015). Productivity Report 2014/2015. Selangor, Malaysia.
Malaysia Productivity Corporation. (MPC) (2016). Productivity Report 2015/2016. Selangor, Malaysia.
Malaysian Investment Development Authority. (MIDA) (2016). Services Sector. Retrieved January 30, 2017, from http://www.mida.gov.my/home/services-sector/posts/
Malik, S. K. (2012). Capital Goods Sector in India, 1990-91 to 2009-10. Paper presented at the 8th International PhD school on Innovation and Development, GLOBELICS Aademy, Rio de Janeiro, Brazil.
Mehrara, M., & Baghbanpour, J. (2016). The Contribution of Industry and Agriculture Exports to Economic Growth: The Case of Developing Countries. World Scientific News, 46, 100-111.
Ministry of Plantation Industries and Commodities. (MPIC) (2016). PEPPER: MPB to Create More Downstream Products. https://www.mpic.gov.my/mpic/index.php/en/rss-content-english/1583-
Moreno, R. M. (2016). Immigrant Labor: Can it Help Malaysia's Economic Development? The World Bank. http://blogs.worldbank.org/eastasiapacific/immigrant-labor-can-it-help-malaysia-s-economic-development
Mucavele, F. G. (2010). True Contribution of Agriculture to Economic Growth and Poverty Reduction: Malawi, Mozambique and Zambia Synthesis Report. Food Agriculture and Natural Resources Policy Analysis Network.
Narayan, P. K. (2005). The Saving and Investment Nexus for China: Evidence from Cointegration Tests. Journal of Applied Economics, 19(2), 245-261.
Nilsson, F. O. L., Lindberg, E., & Surry, Y. (2007). Are the Mediterranean Countries Competitive in Fresh Fruit and Vegetable Exports? (SLU Working Paper Series No. 1) Swedish University of Agricultural Sciences (SLU).
Othman, P., Sungkar, I., & Wan Hussin, W. S. (2009). Malaysia as an International Halal Food Hub: Competitiveness and Potential of Meat-based Industries. ASEAN Economics Bulletin, 26(3), 306-320. https://doi.org/10.1355/AE26-3F
Pesaran, M., Shin, Y., & Smith, R. J. (2001). Bound Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics, 16(3), 289-326. https://doi.org/10.1002/jae.616
Pham, T. T. T., & Riedel, J. (2013). An Empirical Analysis of Comparative Advantage Dynamics. FREIT Working Paper No 633.
Ruban, A. (2016 May, 25). Why Malaysia Imports Vegetables. Malay Mail Online. http://www.themalaymailonline.com/malaysia/article/why-malaysia-imports-vegetables#guZqMYI6FjhlLa9i.97
Schwab, K., & Sala-i-Martin, X. (2014). The Global Competitiveness Report 2014-2015. World Economic Forum, Geneva. http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2014-15.pdf
Tengku Ahmad, T. M. A., & Suntharalingam, C. (2009). Transformation and Economic Growth of the Malaysian Agricultural Sector. Economic and Technology Management Review, 4, 1-10.
Tuah, Y. (2013 August, 25). Commodities: Malaysia's Natural Treasures. The Borneo Post. http://www.theborneopost.com/2013/08/25/commodities-malaysias-natural-treasures/
Verick, S. (2014). Female Labor Force Participation in Developing Countries. IZA World of Labor, 87, 1-10. https://doi.org/10.15185/izawol.87
Welfen, P. J. J., Ryan, C., Chirathivat, S., & Knipping, F. (2009). EU-ASEAN: Facing Economic Globalisation. In P. J. J. Welfen, & D. Borbély (Eds.). Structural Change, Growth and Bazaar Effects in the Single EU Market (pp.7-35). Berlin, Heidelberg: Springer-Verlag. https://doi.org/10.1007/978-3-540-87389-1
Wik, M., Pingali, P., & Broca, S. (2008). Global Agricultural Performance: Past Trends and Future Prospects. Background Paper for the World Development Report 2008. Washington, D.C.: The World Bank.
World Economic Forum. (2015). Country Highlights. Retrieved on May 20, 2016, from http://reports.weforum.org/global-competitiveness-report-2015-2016/country-highlights
Zhu, X. (2012). Understanding China's Growth: Past, Present and Future. Journal of Economic Perspectives, 26(4), 103-124. https://doi.org/10.1257/jep.26.4.103
Copyright Transfer Statement for Journal
1) In signing this statement, the author(s) grant UNIMAS Publisher an exclusive license to publish their original research papers. The author(s) also grant UNIMAS Publisher permission to reproduce, recreate, translate, extract or summarize, and to distribute and display in any forms, formats, and media. The author(s) can reuse their papers in their future printed work without first requiring permission from UNIMAS Publisher, provided that the author(s) acknowledge and reference publication in the Journal.
2) For open access articles, the author(s) agree that their articles published under UNIMAS Publisher are distributed under the terms of the CC-BY-NC-SA (Creative Commons Attribution-Non Commercial-Share Alike 4.0 International License) which permits unrestricted use, distribution, and reproduction in any medium, for non-commercial purposes, provided the original work of the author(s) is properly cited.
3) For subscription articles, the author(s) agree that UNIMAS Publisher holds copyright, or an exclusive license to publish. Readers or users may view, download, print, and copy the content, for academic purposes, subject to the following conditions of use: (a) any reuse of materials is subject to permission from UNIMAS Publisher; (b) archived materials may only be used for academic research; (c) archived materials may not be used for commercial purposes, which include but not limited to monetary compensation by means of sale, resale, license, transfer of copyright, loan, etc.; and (d) archived materials may not be re-published in any part, either in print or online.
4) The author(s) is/are responsible to ensure his or her or their submitted work is original and does not infringe any existing copyright, trademark, patent, statutory right, or propriety right of others. Corresponding author(s) has (have) obtained permission from all co-authors prior to submission to the journal. Upon submission of the manuscript, the author(s) agree that no similar work has been or will be submitted or published elsewhere in any language. If submitted manuscript includes materials from others, the authors have obtained the permission from the copyright owners.
5) In signing this statement, the author(s) declare(s) that the researches in which they have conducted are in compliance with the current laws of the respective country and UNIMAS Journal Publication Ethics Policy. Any experimentation or research involving human or the use of animal samples must obtain approval from Human or Animal Ethics Committee in their respective institutions. The author(s) agree and understand that UNIMAS Publisher is not responsible for any compensational claims or failure caused by the author(s) in fulfilling the above-mentioned requirements. The author(s) must accept the responsibility for releasing their materials upon request by Chief Editor or UNIMAS Publisher.
6) The author(s) should have participated sufficiently in the work and ensured the appropriateness of the content of the article. The author(s) should also agree that he or she has no commercial attachments (e.g. patent or license arrangement, equity interest, consultancies, etc.) that might pose any conflict of interest with the submitted manuscript. The author(s) also agree to make any relevant materials and data available upon request by the editor or UNIMAS Publisher.
