ISSN: 2226-3624
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Economic growth is the most important factor for poverty reduction and development of living standards in developing countries like Malaysia and the rapid economic growth is crucial in advancing the economy towards the Millennium Development Goals (MDGs). However, concerns rose about impending slower growth in Malaysia, and this leads to the question why Malaysia could not maintain a stable increase of economic growth. According to Bank Negara (2012), strengthening domestic demand has become a key driver of growth, underpinning the continued resilience of the economy despite the challenging external environment. On the other hand, as Malaysian economy has undergone transformation into a highly-open economy through greater trade and financial integration since the late 1970s, this study also examine the impact of external demand to the Malaysian economic. Thus, the main objective of this study is to develop an understanding of the impact of the domestic and external demand factors on economic growth in Malaysia using the time series data from 1960 until 2018. The method employed in this study includes Engle Granger Co-integration, Error Correction Model (ECM), and Multiple Linear Regression. This study revealed that household consumption, government spending, gross investment, and export have a positive relationship with economic growth. Meanwhile, import and the economic in Malaysia related negatively. The results of this research support the idea that Malaysia’s growth is externally driven, rather than internally driven. This study also confirms that the variables have significant relationship with economic growth. Therefore, this study suggest that Malaysia need to review and update its high-tech export strategies, and rejuvenate its high-tech export industries to meet the rising challenges of exporting high-tech products to the world.
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In-Text Citation: (Pakasa et al., 2023)
To Cite this Article: Pakasa, U. I., Yacob, Y., Lajuni, N., Abdillah, D. S. Z. A., & Chiat, L. W. (2023). The Impact of Domestic and External Demand Factors on Malaysia Economic Growth. International Journal of Academic Research in Business and Social Sciences, 12(1), 1057 – 1067.
Copyright: © 2023 The Author(s)
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