International trade impacts on economic growth : Evidence from Malaysia and 5 ASEAN countries / Mohd Amirul Izzat Md Yakub

International trade is an important factor in raising living standards, providing
employment and enabling consumers to gain benefit from a wider variety of products. In recent
years, international trade has been increase with a greater share of GDP devoted to exports
and imports. The main purpose of this study is to investigate the impact of international trade
on economic growth in Malaysia and other 5 ASEAN countries which is Indonesia, Singapore,
Thailand, Philippines, and Vietnam. To conduct the panel data analysis 30 years has been
considered, from 1989 to 2018. Exports, imports, consumption expenditure, capital investment
and government spending have been considered as explanatory variables in order to lead this
study.
The empirical evidence conducted by Abu Naser Mizam (2019) mentioned that
international trade may have various consequences depending on the geographical position
of each country and other policies of that country. For example, in Malaysia, trade barriers to
other countries in the region were low except for Hong Kong and Singapore. This policy
strategy has widely acknowledged that the Malaysian economy has been able to effectively
lead to rise the opportunities on the internationalization of production and globalization of world
trade. So, the Granger Causality test has been employed to check the cause and effect
relation between export, import and economic growth.
Thus, this study was conducted to investigate the relationship between international
trades on economic growth in 6 ASEAN countries. Based on the Granger Causality test, the
findings show that export does not Granger cause GDP and GDP does not Granger cause
export. However, the results also shows that import also does not Granger cause GDP, but
GDP does have Granger cause import. Therefore, the 6 ASEAN countries can implement a
domestic policies as a basis of trade. The imposition of domestic taxes or subsidies can induce
the international trade. For examples, a production subsidy imposes in a country will cause a
commodity to be exported, so this will lead to increase the export and at the same time will
lead to rise import.