The impacts of transportation infrastructure towards economic development of Malaysia / Nor Aishah Zaharom

Transport is vital to the well-functioning of economic activities and essential for the development of civilizations. In this paper, we presented an evidence of the impacts of transportation infrastructure towards economic development of Malaysia for the period 1980 to 2015. Using the Ordinary Least Square Regression (OLS) technique, the paper analysed the relationship between transportation infrastructure and economic development through several tests. The tests are normality test, t-test, f-test, heteroskedasticity test, multicollinearity test, BG test, and Ramsey RESET test. The study found that employment in transportation sector and investment made on transport infrastructure in Malaysia has significant positive contribution to growth which shows that each impact is strong and statistically significant. However, the relationship of transport services for import and export with the gross domestic product per capita in Malaysia is not very significant, even though export and import activities can be beneficial to the economy. This is because in Malaysia, most of the transport mode used for export activities is by the sea and rail due to lower transportation cost compared to air freight. This study recommend that the government budget allocation for transport sector should be increase to improve the available infrastructure and to add to the existing infrastructure. Moreover, government should lower the fees for air transport freight in order to enhance the export activities.