The trends, prospects and challenges of Malaysia's export market: a shift share analysis

Abstract

This study examines the trends, prospects and challenges of Malaysia's export market growth between 1990-2001 using the dynamic shift-share method. Two prevalent regional issues in the recent years that have been the concern of the policy makers in Malaysia have been investigated. First, realizing that Malaysia is highly dependent on its export as the engine of growth, the study analyzed the growth of each export product and international market access of these products at 2-digit SITC level for four major categories of manufactured exports. The results indicated that overall, Malaysia has a strong net shift in the chemical (SITC 5) and machinery and transport equipments (SITC 7) especially in office machinery (SITC 75) and electrical (SITC 77) products in the major markets. Secondly, due to the growing competition in international trade, the study also assessed the degree of competition between Malaysia, China and ASEAN-4 counties exporting to the major markets. In general the results revealed that China and other ASEAN countries have an impact on the position of Malaysia as an exporter of manufactured products. It was concluded that China poses stiff challenges to Malaysia in the major markets such as EU, US and Japan. However, China also promises opportunities for Malaysia to export certain products to its own market.