• Lai Wei Sieng Universiti Kebangsaan Malaysia
Keywords: High-income nation, ARDL, Internal factor, External factor


Achieving status of high income nation is the target of nation’s government. Malaysia aims to achieve the status of high income nation by year 2020. In order to achieve the goal, it is crucial to identify the determinants contributing to the effort. Economists suggest that the determinant factors of economic growth consists of internal factors and external factors. This study aims to analyze the internal and external; determinants of Malaysia income growth from year 1985 to 2015. ARDL estimation is applied for this purpose. Results indicate that internal factors that contribute significantly in the long run are employee with high education and fixed capital formation while the exogenous factor is export. Internal determinants in short run is fixed capital formation while exogenous determinant is foreign direct investment. Malaysia’s effort in achieving high income nations would be fruitfull given that the government give attention on both internal and external determinants.


Download data is not yet available.


Abdul Aziz, F. S., & Marwan Mohammad, A. O. (2013). The effect of interest rate, inflation rate, gdp, on real
economic growth rate in Jordan. Asian Economic and Financial Review, 3(3), 341-354.

Afzal, M., Farook, M. S., Ahmed, H. K., Begum, I., & Quddus, M. A. (2010). Relationship between school
education and economic growth in Pakistan: ARDL bounds testing approach to cointegration. Pakistan
Economic and Social Review, 48(1), 39-60.

Agrawal, G., & Khan, M. A. (2011). Impact of FDI on GDP: A comparative study of China and India.
International Journal of Business and Management, 6, 71-79.

Awokuse, T. O. (2002). Is the export-lead growth hypothesis valid for Canada? FREC Staff Paper 02-01.
Department of Food and Resource Economics, University of Delaware.

Balaguer, J., & Jorda, M. C. (2001). Examining the export-led growth hypothesis for Spain in the last century.
Applied Economics Letter, 8, 681-685.

Bini, P., & Masini, R. (2008). Dacia and the Roman empire: Tourism led growth and catchingup with macro
economic constrains. CRIE Working Paper, 1/2008.

Cheam, C. L., Rosli, M., Hussin, A., & Ong, S. C. (2013). Tourism, selected macoeconomics variables and
economic growth: An econometrics of long run and short run relationship. International Journal of Economics
and Management, 7(1), 67-83.

Chor, F. T., & Eu, C. T. (2015). Does tourism effectively stimulate Malaysia’s economic growth? Tourism
Management, 46, 158-163.

Cortes Jimenez, I., & Pulina, M. (2009). Inbound tourism matters to the regional economic growth? The cases
of Spain and Italy. International Journal of Tourism Research.

Ellahi, N., & Kiani, A. (2011). Investigating public investment-growth nexus for Pakistan. International
Conference on E-business, Management and Economics, IPEDR, 25, 239-244.

Fauzi, H., Norazrul, M. R., & Mohd Saifoul, Z. N. (2013). Determinants of economic growth in Malaysia. Asian
Journal of Empirical Research, 3, 1140-1151.

Hakan, O., Zar, C. O., & Zehra, V. S. (2014). Effects of female education on economic growth : a cross country
empirical study. Educational Sciences: Theory & Practise, 15(2), 349-357.

Hasanov, F. (2010). Relationship between inflation and economic growth in Azerbaijani economy: Is there any
threshold effect? Asian Journal of Business and Management Sciences, 1(1), 1-11.

Hock Tsen Wong. (2013). Real exchange rate misalignment and economic growth in Malaysia. Journal Economic
Studies, 40, 298-313.

Hooi, H. L., Sio, H. C., & Chee, W. H. (2014). Tourism and economic growth: comparing Malaysia and
Singapore. International Journal of Economics and Management, 8, 139-157.

Lam, T. D. (2016). An empirical analysis of the ASEAN-4’s causality between exports and output growth.
International Journal of Economics and Financial Issues, 6, 497-502.

Lee, C. G. (2009). Foreign direct investment, pollution and economic growth: evidence from Malaysia. Applied
Economics, 41, 1709-1716.

Lucas, R. E. (1988). On the mechanic of economic development. Journal of Monetary Economics, 22, 4-42.

M. Shabri, A. M., & Salina, H. K. (2015). Assessing the contribution of Islamic finance to economic growth:
Empirical evidence from Malaysia. Journal of Islamic Accounting and Business Research, 6, 292-310.

Mahmoud, K. A., & Zurina, M. M. (2015). The relationship between investment and economic growth in
Malaysia. Journal of Empirical Economics, 4, 116-126.

Mohd Shahidan, S., Hafizah, A. R., & Intan Maizura, A. R. (2013). Relationship among population, energy
consumption and economic growth in Malaysia. The International Journal of Social Sciences, 13, 39-45.

Mohd Yahya, M. H., Fidlizan, M. F. A., & Azila, A. R. (2012). Education expenditure and economic growth: A
causal analysis for Malaysia. Journal of Economics and Sustainable Development, 3, 71-81.

Mori, K., Dullah, M., Lim, F. Y., & Kasim, M. (2010). Determinant factors of economic growth in Malaysia:
Multivariate cointegration and causality analysis. European Journal of Economics, Finance and Administrative
Sciences, 24, 123-137.

Narayan, P. K. (2004). Reformulating critical values for the bounts F-statistics approach to cointegration
analysis: An application to the tourism demand model for Fiji. Discussion Papers, Departments of Applied
Economics. Monash University, Australia

Narayan, P. K. (2005). The saving and investment nexus for China: evidence from cointegration tests. Applied
Economics, 37, 17, 1979-1990.

Ozturk, I., & Acaravci, A. (2010). Export led growth hypothesis: Evidence from Turkey. Journal of Developing
Areas, 44, 245-254.

Pesaran, M.H, & Shin, Y.C. (1991). An Autoregressive Distributed Lag Modelling Appraoch to Cointegration
Analysis. In S. Strom (Ed.), Econometrics and Economy Theory in the 20th Century: The Ragnar Frisch Centennial
Symposium, Cambridge University Press, Cambridge.

Pesaran, M.H., Shin, Y.C., & Smith, R.J. (2001). Bounds testing approaches to the analysis of level relationships.
Journal of Applied Econometrics, 16, 289-326.

Pradhan, R.P. (2009). Education and economic growth in India: Using error correction modeling. International
Research Journal of Finance and Economics, 1, 139-147.

Pramod, K. N., & Puja, P. (2015). On the linkage between stok market development and economic growth in
emerging market economies. Review of Accounting and Finance, 14, 363-381.

Raza, S. A., Sabir, M. S., & Mehboob, F. (2011). Capital inflows and economic growth in Pakistan. MPRA Paper
No. 36790, University Library of Munich, Germany.

Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy. 98: S71-S102.

Sayed Khusairi, S. N., Bushra, A. H., Mohd Zamzuri, A. R., & Mohd Shahrizan, O. (2013). The relationship of
education and ict determinants on nation’s growth: an empirical analysis of Malaysia and muslim
countries. Journal of Human Capital Development, 6, 115-123.

Solow, R. M. (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics, 70, 65-94.
Swan, T. W. (1956). Economic growth and capital accumulation. Economic Record, 32(2), 334-361.

Tan, K. G., Nguyen, Le P. A., & Ye Ye, D. (2015). Development growth models for Singapore and Malaysia: A
Gweke causality analysis. Journal of Centrum Cathedra: The Business and Economics Research Journal, 8, 165-
How to Cite