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DETERMINANTS OF EXPORT PERFORMANCE:MALAYSIAN CASE STUDY
SYEO FALIQ FAHMI BIN SYED FAROUK
Submitted in Partial FulfillmentOf the Requirements for the
Bachelor of Business Administration(Hons) International Business
FACULTV OF BUSINESS MANAGEMENTUNIVERSITI TEKNOLOGI MARA MELAKA
MAY 2007
ACKNOWLEDGEMENT
There are many people who have been enormously helpful in the preparation of this
thesis. First and foremost, my gratitude goes to Allah the Almighty for giving me the
strength and patience in completing this study.
My warmest gratitude goes to lecturers in UiTM Melaka, in particular: Madam Masturah
binti Ma'in (first advisor) and Mr. Mohamed Saladin Abdul Rasool (second advisor) for
giving me beneficial assistance, comments, critics and suggestions throughout the
development of this study. I would never be able to complete this study without their
guidance. I would also like to acknowledge DRB-HICOM Berhad for allowing me to
complete my practical training program
I also wish to thank all my friends especially Mohd Azlan Bin Ahmad, Mas Ayu bte
Othman, Nadiah Abu Bakar and Nadia Fuad for being there when I needed them the
most. I really treasure your honest opinions and encouragement that have put me
through the good and bad times. Your assistance is a major contribution to me in
completing this study. Besides that, my best regards and thanks to everyone who had
contributed in the making of this research whether directly or indirectly.
Last but not least, I would like to express my deepest gratitude to my beloved mother:
Madam Najebah Hj Yahaya, as well as my family members for their untiring support,
assistance, guidance and encouragement.
Thank you.
IV
TABLE OF CONTENT
CONTENT
ACKNOWLEDGEMENTLIST OF TABLESLIST OF FIGURESABSTRACT
CHAPTER 1: INTRODUCTION
1.1 Background of Study1.2 Overview of Malaysian Export Performance1.3 Problem Statement1.4 Research Questions1.5 Research Objectives1.6 Theoretical Framework1.7 Significance of study1.8 Scope of study1.9 Limitations of Study1.10 Definitions of Terms
CHAPTER 2: LITERATURE REVIEW
PAGE
ivviiiixx
247
11111217181920
2.1 Studies on Determinants of Export Performance 232.2 Foreign Direct Investments as Determinants of Export Performance 252.3 REER as Determinants of Export Performance 272.4 Trading Partners' Income as Determinants of Export Performance 292.5 Inflation as Determinants of Export Performance 30
CHAPTER 3: RESEARCH METHODOLOGY
3.13.23.3
Research DesignData Collection MethodData Analysis and Interpretation
333334
CHAPTER 4: DATA ANALYSIS AND INTERPRETATION
4.14.24.34.44.54.6
IntroductionTrend Analysis of Foreign Direct Investment of MalaysiaTrend Analysis of Annual REER of MalaysiaTrend Analysis of Annual Trading Partners' Income of MalaysiaTrend Analysis of Annual Inflation Rates of Malaysia.Estimation of Determinants of Export Performance of Malaysia
v
363637394040
LIST OF FIGURESPAGE
Figure 1.1 - Malaysia Export Performance 6
Figure 1.2 - Theoretical Framework of Study 16
Figure 4.1 - Trend Analysis of Foreign Direct Investment of Malaysia 36
Figure 4.2 - Trend Analysis of Annual Real Effective Exchange Rates of Malaysia 37
Figure 4.3 - Relationship between Exports Performance and REER 38
Figure 4.4 - Trend Analysis of Annual Trading Partners' Income of Malaysia 39
Figure 4.5 - Relationship between Export Performance of Malaysia and Trading
Partners'lncome 39
Figure 4.6 - Annual Inflation Rates of Malaysia 40
Vlll
ABSTRACT
Year by year, total trade of our country have increased tremendously and being one of
the major revenues to boost up our economy and providing lines of employments
throughout the nations. As Malaysia implemented export-oriented development strategy
beginning in the 1980s, exporting has been the major vehicle that has transformed
Malaysia from a primary commodity based economy to a more industrial based on. Thus
it is important to have an idea what are the determinants of Malaysia export performance
so that we could focus on these determinants in order for us to stay afoot in today's
world of globalization. However, there were few studies have been made worldwide in
tackling the question of what are the factors that boost a country's export performance
as most of them focused only on firm-level instead of country-level as a whole.
Therefore the purpose of this study is to examine the factors that influence the export
performance in Malaysia. In addition, this paper also attempts to look at the trends of
those determinants and how they affect our country's export performance.
Based on some studies made by few international researchers, there are several factors
that influence the export performance of a country, which are the Foreign Direct
Investment, Real Effective Exchange Rates, trading partners' income and inflation rates
This study found out that all four variables mentioned above, have a significant impact
on determining what are the factors that boost Malaysia's export performance and it is
vital for government to take essential steps in securing this variables to ensure that
exports will still be one of Malaysia's most important revenue generators
IX