Asymmetric Effects of Trade Openness on Malaysian Fish Trade Balance

Authors

  • Bee-Hui Soh School of Social Sciences, Universiti Sains Malaysia (USM)
  • Ghee-Thean Lim School of Social Sciences, Universiti Sains Malaysia (USM)
  • Soo-Yean Chua School of Social Sciences, Universiti Sains Malaysia (USM)

DOI:

https://doi.org/10.33736/ijbs.4600.2022

Keywords:

Fishery, Malaysia, NARDL, Trade Balance, Trade Openness

Abstract

Although Malaysia is a small open economy surrounded by the ocean, it still experiences a critical fish trade deficit. This study examines the nonlinear effects of trade openness on Malaysian fish trade balance from 1976 to 2016, using the Nonlinear Autoregressive Distributed Lag (NARDL) approach. The other independent variables applied in the model are the exchange rate and domestic income. Findings show that the variables are cointegrated. In the long-run, positive change in trade openness has a significant negative effect on the trade balance. The emphasis of the study is also placed on shreds of evidence of the long-run and short-run asymmetric effects of trade openness. Domestic income and depreciation of the exchange rate offer significant positive impacts on the trade balance. In the short-run, all the variables yield an opposite effect. The outcome of the exchange rate supports the J-curve effect and the Marshall-Lerner condition. This research may help the policymakers and traders to have a better understanding of the sector and thus develop suitable long-term strategies to improve the fish trade balance.

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Published

2022-03-31

How to Cite

Bee-Hui Soh, Ghee-Thean Lim, & Soo-Yean Chua. (2022). Asymmetric Effects of Trade Openness on Malaysian Fish Trade Balance. International Journal of Business and Society, 23(1), 88–105. https://doi.org/10.33736/ijbs.4600.2022