The Influence of Malaysian FTAs on trade and investment

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1、TheInfluenceofMalaysianFTAsonTradeandInvestment,withSpecialReferencetoMalaysia-IndiaFTAPritishKumarSahu*Malaysianeconomyhasremainedlargelyopentotradeandinvestmentinthelasttwodecades.Overtheyears,Malaysiahasestablishedseveraltradeagreementswithdifferentcountries,includingIndia.Thepresentstudyf

2、ocusesonthetraderelationshipbetweenMalaysiaanditsFTApartnerswithspecialemphasisonMalaysia-IndiaComprehensiveEconomicCooperationAgreement(MICECA).ItfirstassessesMalaysia’sFTApoliciesinalargercontextwiththerestoftheworld,beforeanalyzingthetariffcommitmentsandtheinitiativestakenbyMalaysiaandIndi

3、awiththesigningofMICECA.ThestudyalsolooksatthepotentialsectorswhereMalaysiacanpossiblyengageinastrongtradewithIndia.ItattemptstoanalyzewhethertheincreasedtradeofMalaysiawithitsFTApartnershasstimulatedFDIinflowintoMalaysiafromitsFTApartnersbyusingGrangercausalitytestfortheperiod2004-2011.There

4、sultsofseparateanalysisshowthattotalexportandtotalimportdoesnotGranger-causeFDIfromtheFTApartners.Furtherincontextofmanufacturing,acausalrelationshipbetweenFDIintomanufacturingandmanufacturingexportcouldnotbeestablishedbetweentheFTApartners.However,atonelag,theresultssuggestthedirectionofcaus

5、alitybetweentotaltradewithitsFTApartnersandtotalFDIinflowfromitsFTApartners.IntroductionThemostimportantdevelopmentthathastakenplaceinthepasttwodecadesisthatthemajordevelopingcountrieswiththeirstrategieshavebeguntointegratemoreactivelywiththeglobaleconomy.Everydevelopingandemergingeconomycont

6、inuestoundertakevibranteconomicpoliciesforhighereconomicgrowth,attractinginflowofprivateforeigninvestmentandboostingtrade.Malaysiaisnotanexceptiontothis.Eversincetheinceptionofeconomicliberalizationandopeningofitspoliticalboundary,particularlyinthelaterpartofthe1960s,Malaysia’seconomicrelatio

7、nswithmajorcountrieshaveshownaconsiderableimprovement.AsMalaysiademonstratestheeconomicandthetechnologicalcapacitiestocompeteinthe21stcenturywithanaimtofeatureamongstthedevelopednations,itisimportanttoseehow*Lecturer,FacultyofBusiness,Multime