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Free trade agreements and production sharing in Malaysian manufacturing industries

Malaysia unilaterally reduced its tariff and expanded its bilateral manufactured exports in the 1990s. However, in the 2000s, Malaysia signed a growing number of free trade agreements (FTA) to lower its tariff among member countries. This study examines the impact of the growing number of FTAs on...

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Main Authors: Choong, Pai Wei, Noor Aini Khalifah,, Abu Hassan Shaari Md Nor,, Mohd Adib Ismail,
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2018
Online Access:http://journalarticle.ukm.my/20073/1/jeko_523-7.pdf
http://journalarticle.ukm.my/20073/
https://www.ukm.my/jem/issue/v52i3/
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spelling my-ukm.journal.200732022-10-11T09:18:48Z http://journalarticle.ukm.my/20073/ Free trade agreements and production sharing in Malaysian manufacturing industries Choong, Pai Wei Noor Aini Khalifah, Abu Hassan Shaari Md Nor, Mohd Adib Ismail, Malaysia unilaterally reduced its tariff and expanded its bilateral manufactured exports in the 1990s. However, in the 2000s, Malaysia signed a growing number of free trade agreements (FTA) to lower its tariff among member countries. This study examines the impact of the growing number of FTAs on Malaysia’s bilateral manufactured exports at industry level in general and based on production sharing in particular over the period of 1990 to 2016 by three-year average. FTA-and-foreign input interaction term is embedded in the gravity equation model to examine the extent of FTAs in expanding production sharing-based bilateral manufactured exports. The empirical results of this study are based on dynamic panel system generalized method of moments (SYS-GMM) technique where FTA dummies are weakly exogenous. The findings show that the ASEAN Free Trade Area (AFTA) and bilateral trade agreements have significant impact on Malaysia’s non-resource-based exports and are associated with production sharing; while AFTA-plus-one shows no evidence of diverting Malaysian production sharing-based bilateral manufactured exports from its member countries. Moreover, FTA formation has no relation to the Malaysian resource-based exports. The proliferation of FTAs does not assure net export-enhancing effect on manufacturing activities among member countries, but is largely associated with international production sharing. Penerbit Universiti Kebangsaan Malaysia 2018 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/20073/1/jeko_523-7.pdf Choong, Pai Wei and Noor Aini Khalifah, and Abu Hassan Shaari Md Nor, and Mohd Adib Ismail, (2018) Free trade agreements and production sharing in Malaysian manufacturing industries. Jurnal Ekonomi Malaysia, 52 (3). pp. 91-106. ISSN 0127-1962 https://www.ukm.my/jem/issue/v52i3/
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description Malaysia unilaterally reduced its tariff and expanded its bilateral manufactured exports in the 1990s. However, in the 2000s, Malaysia signed a growing number of free trade agreements (FTA) to lower its tariff among member countries. This study examines the impact of the growing number of FTAs on Malaysia’s bilateral manufactured exports at industry level in general and based on production sharing in particular over the period of 1990 to 2016 by three-year average. FTA-and-foreign input interaction term is embedded in the gravity equation model to examine the extent of FTAs in expanding production sharing-based bilateral manufactured exports. The empirical results of this study are based on dynamic panel system generalized method of moments (SYS-GMM) technique where FTA dummies are weakly exogenous. The findings show that the ASEAN Free Trade Area (AFTA) and bilateral trade agreements have significant impact on Malaysia’s non-resource-based exports and are associated with production sharing; while AFTA-plus-one shows no evidence of diverting Malaysian production sharing-based bilateral manufactured exports from its member countries. Moreover, FTA formation has no relation to the Malaysian resource-based exports. The proliferation of FTAs does not assure net export-enhancing effect on manufacturing activities among member countries, but is largely associated with international production sharing.
format Article
author Choong, Pai Wei
Noor Aini Khalifah,
Abu Hassan Shaari Md Nor,
Mohd Adib Ismail,
spellingShingle Choong, Pai Wei
Noor Aini Khalifah,
Abu Hassan Shaari Md Nor,
Mohd Adib Ismail,
Free trade agreements and production sharing in Malaysian manufacturing industries
author_facet Choong, Pai Wei
Noor Aini Khalifah,
Abu Hassan Shaari Md Nor,
Mohd Adib Ismail,
author_sort Choong, Pai Wei
title Free trade agreements and production sharing in Malaysian manufacturing industries
title_short Free trade agreements and production sharing in Malaysian manufacturing industries
title_full Free trade agreements and production sharing in Malaysian manufacturing industries
title_fullStr Free trade agreements and production sharing in Malaysian manufacturing industries
title_full_unstemmed Free trade agreements and production sharing in Malaysian manufacturing industries
title_sort free trade agreements and production sharing in malaysian manufacturing industries
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2018
url http://journalarticle.ukm.my/20073/1/jeko_523-7.pdf
http://journalarticle.ukm.my/20073/
https://www.ukm.my/jem/issue/v52i3/
_version_ 1748181763694264320
score 13.211869

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