Asymmetric Effects of Trade Openness on Malaysian Fish Trade Balance

  • 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)
Keywords: Fishery, Malaysia, NARDL, Trade Balance, Trade Openness


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.


Ahad, M. (2017). Impact of financial development on trade balance: An ARDL cointegration and causality approach for Pakistan. Global Business Review, 18(5), 1199-1214.

Alexander, S. S. (1952). Effects of a devaluation on a trade balance. International Monetary Fund Staf Papers, 2(2), 263-278.

Alshubiri, F., Elheddad, M., & Doytch, N. (2020). The impact of fish production on marine trade balance and foreign direct investment: An empirical study of the GCC economies. Marine Policy, 116, 103660.

Anh, V. T., & Duc, V. H. (2016). Trade balance and exchange rate in Thailand & the implications for Vietnam: An application using instrumental variable and the heterogeneous panel cointegration methods. Journal of Economic Development, 23(1), 137-160.

Asche, F. (2014). Exchange rates and the seafood trade. In GLOBEFISH research programme (vol. 113). Rome: FAO.

Asche, F., Bellemare, M. F., Roheim, C., Smith, M. D., & Tveteras, S. (2015). Fair Enough? Food Security and the International Trade of Seafood. World Development, 67, 151-160.

Asif, K. (2014). Determinants of trade balance: A comparison between Pakistan and India. Business Review , 9(1), 33-46.

Atici, C. (2012). Carbon emissions, trade liberalization, and the Japan-ASEAN interaction: A group-wise examination. Journal of the Japanese and International Economies, 26(1), 167-178.

Bahmani-Oskooee, M. (1985). Devaluation and the J-curve: Some evidence from LDCs. The Review of Economics and Statistics, 67(3), 500-504.

Bahmani-Oskooee, M., & Fariditavana, H. (2015). Nonlinear ARDL approach, asymmetric effects and the J-curve. Journal of Economic Studies, 42(3), 519-530.

Bahmani-Oskooee, M., & Kanitpong, T. (2017). Do exchange rate changes have symmetric or asymmetric effects on the trade balances of Asian countries? Applied Economics, 49(46), 4668-4678.

Barattieri, A. (2016). Asymmetric Trade Liberalizations and Current Account Dynamics. A Dynamic Economic and Monetary Union (ADEMU) Working Paper No. 2016/018. Retrieved from

Bardakas, I. C. (2013). The asymmetric effect of income on import demand in Greece. In Bank of Greece printing works (no. 159). Retrieved from

Bayramoglu, B., & Jacques, J.-F. (2012). Fishery Resources and Trade Openness: Evidence from Turkey. Institut National de la Recherche Agronomique (INRA) Working Paper Series No. 2012/02.

Bernard, A. B., Eaton, J., Jensen, J. B., & Kortum, S. (2003). Plants and productivity in international trade. American Economic Review, 93(4), 1268-1290.

Bhat, J. A., & Sharma, N. K. (2018). The twin-deficit hypothesis: Revisiting Indian economy in a nonlinear framework. Journal of Financial Economic Policy, 10(3), 386-405.

Bouzas, R., & Keifman, S. (2003). Making trade liberalization work. In After the Washington consensus: Restarting growth and reform in Latin America. Washington: Institute for International Economics.

Chaudhary, M. A., & Amin, B. (2012). Impact of trade openness on exports growth, imports growth and trade balance of Pakistan. Forman Journal of Economic Studies, 8, 63-81.

Chiu, Y. B., & Ren, R. (2019). Trade balance, savings rate, and real exchange rate: Evidence from China and its trading partners. Emerging Markets Finance and Trade, 55(2), 351-364.

Coxhead, I. (2007). A new resource curse? Impacts of China's boom on comparative advantage and resource dependence in Southeast Asia. World Development, 35(7), 1099-1119.

Dar, A., & Amirkhalkhali, S. (2003). On the impact of trade openness on growth: Further evidence from OECD countries. Applied Economics, 35(16), 1761-1766.

Department of Fisheries Malaysia. (2020). Act and Regulations. Retrieved April 17, 2020, from

Department of Statistics Malaysia. (2018). Selected Agricultural Indicators, Malaysia, 2018. Retrieved September 3, 2019, from

Duasa, J. (2007). Determinants of Malaysian trade balance: An ARDL bound testing approach. Global Economic Review, 36(1), 89-102.

Erhardt, T. (2018). Does trade openness cause overfishing? Journal of the Association of Environmental and Resource Economists, 5(4), 695-711.

Federal Agricultural Marketing Authority. (2021). Guidelines For Exporting Processed and Fresh Agricultural Food Products. Retrieved February 17, 2021, from

Federal Reserve Bank of St. Louis (FRED). (2019). Malaysia / U.S. Foreign Exchange Rate. Retrieved September 2, 2019, from

Food and Agriculture Organization (FAO). (2018). The State of World Fisheries and Aquaculture 2018- Meeting the Sustainable Development Goals. Rome: FAO.

Food and Agriculture Organization Fishery Statistics (FishStat). (2019). Time-series Query On: Commodity Trade and Production. Retrieved August 24, 2019, from

Frenkel, J. A., Gylfason, T., & Helliwell, J. F. (1980). A synthesis of monetary and Keynesian approaches to short-run balance-of-payments theory. The Economic Journal, 90(359), 582-592.

Friedman, M. (1957). Introduction to a theory of the consumption function. In A theory of the consumption function. New Jersey: Princeton University Press.

Gani, A. (2017). The logistics performance effect in international trade. Asian Journal of Shipping and Logistics, 33(4), 279-288.

Ghani, G. M. (2009). The impact of trade liberalization on developing countries' trade balances with industrial and developing countries: An econometric study. International Journal of Business and Society, 10(2), 53-64.

Global Economy. (2019). Malaysia Trade Openness. Retrieved August 18, 2019, from

Gong, L., & Kinnucan, H. W. (2015). Effects of recession and dollar weakening on the U.S. agricultural trade balance. Southern Agricultural Economics Association (SAEA) Annual Meeting, 1-34. Atlanta, Georgia.

Guechari, Y. (2012). An empirical study on the effects of real effective exchange rate on Algeria's trade balance. International Journal of Financial Research, 3(4), 102-115.

Hannesson, R. (2001). Effects of Liberalizing Trade in Fish, Fishing Services and Investment in Fishing Vessels. Bergen: OECD.

Har, W. M., Lee, T. H., Chew, K. M., & Goh, H. S. (2014). Validity of Marshal Lerner hypothesis: An empirical study on Malaysia-United States trade balance. Asian Research Journal of Business Management, 1(3), 18-26.

Hassan, M. S., Wajid, A., & Kalim, R. (2017). Factors affecting trade deficit in Pakistan, India and Bangladesh. Economia Politica, 34(2), 283-304.

Idris, J., Zulkornain Y., Habibullah, M. S., & Chin, L. (2018). Openness and economic growth in developing and OECD countries. International Journal of Economics and Management, 12(2), 693-702.

International Trade Centre. (2019). List of Importing Markets For A Product Exported by Malaysia | Product: 03 Fish And Crustaceans, Molluscs And Other Aquatic Invertebrates. Retrieved May 1, 2020, from

Keynes, J. M. (1936). The General Theory of Employment, Interest and Money. London: Macmillan.

Khan, M. A., Jaffri, A. A., Abbas, F., & Haider, A. (2017). Does trade liberalization improve trade balance in Pakistan? South Asia Economic Journal, 18(2), 158-183.

Koen, V., Asada, H., Nixon, S., Rahuman, M. R. H., & Arif, A. Z. M. (2017). Malaysia's Economic Success Story and Challenges. OECD Economics Department Working Papers No. 1369.

Krueger, A. O. (1985). The experience and lessons of Asia's super exporters. In Export-oriented development strategies: The success of five newly industrializing countries. Boulder: Westview Press.

Kyophilavong, P., Shahbaz, M., Rehman, I. U., Souksavath, S., & Chanthasene, S. (2018). Investigating the relationship between trade balance and the exchange rate: The case of Laos' trade with Thailand. Global Business Review, 19(3), 590-603.

Lee, C., & Law, C. H. (2013). The effects of trade openness on Malaysian exchange rate. International Economic and Finance Journal, 8(1), 25-39.

Li, K. (1997). The Effect and Strategy of China's Trade Liberalization. Tokyo: Institute of Developing Economies.

Macdougall, G. D. A. (1952). British and American exports: A study suggested by the theory of comparative costs. part II. The Economic Journal, 62(247), 487-521.

Myint, H. (1977). Adam Smith's theory of international trade in the perspective of economic development. Economica, 44(175), 231-248.

Ng, Y. L., Har, W. M., & Tan, G. M. (2008). Real exchange rate and trade balance relationship: An empirical study on Malaysia. International Journal of Business and Management, 3(8), 130-137.

Okamoto, Y. (1994). Impact of trade and FDI liberalization policies on the Malaysian economy. The Developing Economies, 32(4), 460-478.

Organisation for Economic Co-operation and Development (OECD)/FAO. (2017). OECD-FAO Agricultural Outlook 2017-2026. Paris: OECD.

Ousseini, A. M., Hu, X., & Aboubacar, B. (2017). WAEMU trade and current account balance deficit analysis: A panel VAR approach. Theoretical Economics Letters, 7, 834-861.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326.

Phan, T. H., & Jeong, J. Y. (2015). Vietnam trade balance and exchange rate: Evidence from panel data analysis. Journal of Applied Economics & Business Research, 5(4), 220-232.

Ricardo, D. (1817). On the Principles of Political Economy and Taxation. London: John Murray.

Rose, A. K., & Yellen, J. L. (1989). Is there a J-curve? Journal of Monetary Economics, 24(1), 53-68.

Sastre, L. (2005). An Alternative Model for the Trade Balance of Countries with Open Economies: The Spanish Case. Madrid: Department of Economic Analysis (UNED).

Sharif, M. N., & Ali, A. Y. S. (2016). Determinants of trade balance in Somalia: Regression analysis using time series data. Journal of Economics and Sustainable Development, 7(12), 62-71.

Shin, Y., Yu, B., & Greenwood-Nimmo, M. (2014). Modelling asymmetric cointegration and dynamic multipliers in a nonlinear ARDL framework. In W. Horrace, & R. Sickles (Eds.), The festschrift in honor of Peter Schmidt.: Econometric methods and applications. New York: Springer.

Sivrikaya, A., & Ongan, S. (2019). BREXIT and the J-Curve hypothesis for the UK: A nonlinear ARDL approach. Sosyoekonomi, 27(40), 229-239.

Soh, B. H., & Lim, G. T. (2020). Macroeconomic variables affecting the fish trade balance in Malaysia. Journal of Economics and Sustainability (JES), 2(2), 52-62.

Soh, B. H., Lim, G.-T., & Chua, S. Y. (2021). Competitiveness of Malaysian fisheries exports: A constant market share analysis. Malaysian Journal of Economic Studies, 58(2), 175-198.

Soleymani, A., & Chua, S. Y. (2014). How responsive are trade flows between Malaysia and China to the exchange rate? Evidence from industry data. International Review of Applied Economics, 28(2), 191-209.

Tufail, M. K., Anwar, S., Raza, S. H., & Abbas, K. (2014). Effect of budget deficit on trade deficit in Pakistan (A time series analysis). Journal of Finance and Economics, 2(5), 145-148.

TveterÄs, S., & Asche, F. (2008). International fish trade and exchange rates: An application to the trade with salmon and fishmeal. Applied Economics, 40(13), 1745-1755.

Waliullah, Kakar, M. K., Kakar, R., & Khan, W. (2010). The determinants of Pakistan's trade balance: An ARDL cointegration approach. The Lahore Journal of Economics, 15(1), 1-26.

World Bank. (2019a). GDP Per Capita (Constant 2010 US$) | Data. Retrieved September 3, 2019, from

World Bank. (2019b). Trade (% of GDP) | Data. Retrieved September 3, 2019, from

Yusoff, F. M., & Arshad, A. (2017). Asian-Pacific Aquaculture 2017 - Meeting Abstract. Retrieved July 20, 2019, from

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.