Thirunaukarasu Subramaniam

Leveraging trade opportunities with non-traditional partners: the Malaysia–GCC perspective

Abstract This paper examines the impact of economic factors on bilateral trade flows between Malaysia and the GCC through estimations of panel data using a gravity model. In particular, the paper compares the determinants of bilateral trade and trade potentials between Malaysia and two regions, the non-traditional Gulf alliance and the traditional ASEAN counterpart, to provide insights for leveraging opportunities through trade with the former. The gravity estimates imply the importance of size effects, similarities in GDP and differences in factor endowments as drivers of trade flows between Malaysia and the GCC, underlying the fact that inter-industry trade dominates these flows. The opposite holds in the case for the Malaysia–ASEAN trade. Though export potentials for industrial products per se appear exhausted in trade with both regions, the Gulf region provides opportunities for Malaysia to export quantity-based final (end-use) products and to diversify its exporting strategy away from quality-based parts and components.

International Capital Inflows and Labour Immigration: A Heterogeneous Panel Application in Malaysian Manufacturing Industries

The paper examines the relationship between inward FDI and unskilled migrants for a panel of 23 industries using the new trade theory multivariate model framework for the period 2000-2009, and compares the links with 1985-1999 (first-subperiod) and 1985-2009 (overall period) in a univariate context. Based on heterogeneous panel cointegration tests, there is a long-run equilibrium between inward FDI, unskilled migrant share, output growth, export intensity and market concentration. The long-run cointegrating coefficient based on the FMOLS estimator suggests the presence of unskilled workers a significant location determinant for inward FDI for the first sub-period and the overall period. The results of the panel vector error correction model further attest to causal links between unskilled migrant worker presence and inward FDI in the short- and long-run. Bidirectional causality between inward capital and labour flows is present in the first sub-period and unidirectional causal links from unskilled migrants to inward FDI is evident for the overall period. The observed FDI-immigration (unskilled) links in manufacturing support the argument that inward FDI is induced by unskilled migration. Overall, unskilled immigration increases FDI inflows or rather “capital chases labour” in terms of international factor mobility. This has profound implications for public policy as the government seeks to reduce its dependence on migrant workers. Policy coordination is therefore needed between regulating inflows of foreign capital and foreign labour so that implemented policies do not pull in different directions and undermine Malaysia’s attractiveness as a destination for FDI.

UNEMPLOYMENT AND SPEED OF ADJUSTMENT IN ASEAN-3 ECONOMIES: A COINTEGRATION ANALYSIS

This paper investigates the existence of long-run relationship between unemployment and several key macroeconomic variables in Malaysia, Singapore, and the Philippines. The Johansen–Juselius cointegration method confirms the existence of a stationary long-run cointegration relationship between unemployment and its determinants in all three countries. Exports and foreign direct investment are important determinants of unemployment in Malaysia. In the Philippines, government spending and exports are inversely related to unemployment. In Singapore, only exports appeared as a significant factor in determining unemployment. The results show that the speed of adjustment following a shock is more rapid in Singapore compared to the other two ASEAN countries.

Taxation, growth and the stock traded nexus in emerging Asian countries: heterogeneous and semi-parametric panel estimates

Abstract This study attempts to investigate the impact of economic growth and stock traded on taxation for emerging Asian countries, namely China, India, Indonesia, Republic of Korea, Malaysia and Thailand. To examine the plausible links between these indicators, we used semi-parametric, heterogeneous and panel causality analysis by employing data covering the period 1990–2014. The semi-parametric estimates indicate a U-shape effect between growth and taxation, along with elastic opposite direction effects of stock traded on taxation. This suggests that higher growth will have a positive influence on taxation in emerging Asian countries. The findings of the Dumitrescu and Hurlin (DH) heterogeneous Granger causality test revealed that there is a bi-directional causality running between growth and taxation, and a uni-directional causality running from stock traded to taxation,and from growth to stock traded.This confirms the presence of a growth-led taxation nexus in emerging Asian countries.

DETERMINANTS OF FEMALE FERTILITY IN ASEAN-5: EMPIRICAL EVIDENCE FROM BOUNDS COINTEGRATION TEST

The ASEAN countries have been experiencing drastic declines in fertility of more than 10 percent, particularly since the 1990s. Though the literature on fertility has clearly delineated the importance of income, female labor force participation and infant mortality as key determinants of fertility rates (FRs), the empirical findings from previous studies remains at best mixed. This study therefore identifies the determinants of female fertility for the countries, namely Indonesia, Malaysia, Philippines, Singapore and Thailand (ASEAN-5 countries), spanning the period 1980–2010. Using the Autoregressive Distributed Lag (ARDL) cointegration and causality techniques, the main findings of the study are summarized as follows: First, a long-run (LR) stable relationship is evident between female fertility, female labor force participation, income and infant mortality for ASEAN-5. Second, there is a deviation of FRs from the short-run (SR) to the LR equilibrium for ASEAN-5, with the highest and lowest speed of adjustment recorded for Malaysia and Thailand, respectively. Third, FR and economic stability are found to be complementary in the LR for ASEAN-5. When the joint LR and SR causalities are considered, we found that female labor force participation, income and infant mortality have dynamic relationships with FR for all the five ASEAN countries.

SEJARAH EKONOMI NEGARA BRUNEI DARUSSALAM, 1906-2011 (ECONOMIC HISTORY OF BRUNEI DARUSSALAM, 1906-2011)

The Brunei economy has gone through significant changes throughout the period from 1900 to present. The resources as well the economic activity had gone through tremendous changes in their contribution towards the national income. As such, this paper will explain the background and the history of Brunei economy. It expounds the history of Brunei economy before 1906 or the traditional period, the Brunei economy during the British Resident administration (1906-1941), the Brunei economy during the Japanese occupation (1941-1945), the Brunei economy during the administration of British Resident (1946-1959), the Brunei economy during self-government (1959-1983) and finally the progress in Brunei economy post independence (1984-2011). Emphasis will be given to the development of oil and gas industry (oil sector) which plays an important role in the development of Brunei economy since its finding. Emphasis is also given to the contribution of the export from oil sector towards Brunei economy and its implications for the non-oil sector. This includes several economic resources that initially were main export commodities of Brunei which subsequently declined and no longer contribute towards the economy of Brunei. The trends of contribution for oil and non-oil sector to the Brunei economy is also analysed.

Trade Linkages and Domestic Market Concentration: An Empirical Exploration for Malaysia

This paper examines the univariate relationship between global linkages of the Malaysian manufacturing sector in the form of export intensity and intra-industry trade, respectively, on inter-industry concentration. The recently developed fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) panel cointegration techniques are employed. The estimated long-run coefficients reveal that intra-industry trade contributes towards more concentrated markets. However, export intensity is not significantly associated with market dominance. This suggests that that domestic market structure is directly related to industries that engage in two-way trade flows or trade overlap. The structure of trade therefore deserves further attention when analyzing market dominance in the Malaysian manufacturing sector, which is globally integrated at the production level. It would thus be viable to examine why and to what extent vertically integrated industries that simultaneously facilitate not just external markets for components/final products but also the import markets for components (inputs) pose barriers to industries that are less networked globally.

Trade Interactions between Asia and Latin America: ASEAN, ‘Game Changer’ and ‘Platform’ for Interregional Engagement?

This paper compares trade interactions between six selected ASEAN economies with Latin America with that of China, a forerunner in engagement with Latin America. Trade between China and Latin America suggest that complementary comparative advantages are developing along the lines of center-periphery relations. Contrary to China-Latin America, the ASEAN region can plausibly be a ‘game changer’ to the existing patterns of interregional Asia-Latin America relationship, by capitalizing on the growing, albeit small, intra-industry trade flows with their Latin American counterparts. The paper contends that ASEAN also plays an important role through the ASEAN-Pacific Alliance bloc-to-bloc approach to transcend the present bilateral or country-level engagements. This sub-interregional connection is considered the most pragmatic solution for deepening trade integration between Asia and Latin America. Taken together, these findings suggest that ASEAN can take on a balancing game to interregional patterns of specialization and emerge a platform for sub-interregional engagements.

Trade Interactions of China-Latin America vis-à-vis ASEAN-Latin America: The Relevance of the Center-Periphery Relations?

This paper compares the role of relative factor endowment differences in driving bilateral trade flows between China and six selected ASEAN economies with Latin America. The findings reveal that relative factor endowment differences are consistently positive and significant for increasing export flows between China and Latin America, suggesting that complementary comparative advantages are developing along the lines of center-periphery relations. Contrary to China-Latin America, specific individual ASEAN countries trade in manufactures with Latin America offer prospects for trade specialization beyond the traditional view of comparative advantages, which is based on similarities in factor endowments. Taken together, these findings suggest that the ASEAN region can plausibly be a game changer to the existing patterns of interregional Asia-Latin America relationship, namely that of China-Latin America, by capitalizing on intra-industry trade flows with their Latin American counterparts.

Rebalancing Through Expansions in Intra-ASEAN Exports? Insights from Gravity Panel Estimates

This paper examines the impact of common economic factors on intra-ASEAN bilateral exports through estimations of panel data using a gravity model. In particular, the paper compares the determinants of two-way bilateral exports within the pioneer ASEAN member economies from that of the pioneer-newer ASEAN economies, to provide insights on the specific channels and trading relationships relevant for boosting intra-regional exports. The gravity estimates imply the importance of the overall size effects and similarities in size between the pioneer-newer ASEAN partnerships for export expansions, and also for trade in agriculture and manufactures. These channels however do not bolster exports amongst the pioneer ASEAN economies. The empirical findings therefore add weight to the observation that strategic partnerships are necessary within the region to bolster intra-regional exports through the level and relative size effects. We therefore posit that any rebalancing strategy to increase intra-regional exports should move beyond the focus on the pioneer ASEAN members per se, to foment greater trade cooperation between the pioneer and newer ASEAN economies.