In recent years, it is in the interest of the Malaysian government to expand its export market to the Middle Eastern countries. This can be seen in the economic blueprint of the New Economic Model (NEM) which was launched in March 2010, where a new strategy would be adopted to shift its trade dependency on the traditional markets and exploring new markets especially for exports. In the post September 11 terrorist attack that hit the U.S and in light with the on-going global economic and financial crises, a study of the Malaysia-OIC export linkages has become more relevant than ever. The focus of this research is to examine the impact of economic factors on bilateral exports between Malaysia and the OIC member countries. Using the panel estimation for gravity model, the data covers the period of 1997 to 2009.
In summary, for exports flows between Malaysia and the OIC countries, an analysis of the gravity model demonstrated that the major determinants are the size of the economies, level of openness of the economy, inflation and the exchange rates. Several policy implications can be drawn from the results of the gravity model. For one, it is vital for Malaysian policy makers to play an important role to exploit the vast market of the OIC region, such as focusing on the African region, accelerating the effort to establish the Islamic Common Market (ICM), liberalizing the economy further, and intensifying endeavours in curbing corrupt practices.
Read more: http://repo.uum.edu.my/24788/
Suggested by: Wan Aznie Fatihah Wan Abd Jalil (Statistician, DOSM)
