Do neighbouring countries matter for Sarawak economic development?

Abstract

The objective of the present paper is to address the question whether the economic development of the state of Sarawak has an impact on her neighbouring countries or vice versa, the growth of her neighbouring countries have causal effect on the growth of the state of Sarawak. Using annual data for the period 1968 to 2003, our results indicate that the growth of the state of Sarawak is affected by the growth of Bru nei Darussalam, Sabah, Kalimantan Barat and Kalimantan Timur. On the other hand, the growth in the state of Sarawak has an impact on the growth of the state of Sabah and province of Kalimantan Timur.