Export-Led Growth Theory: Malaysian Timber Industry

Malaysia is one of the world’s largest exporters of tropical timber and timberproducts with export destinations to 160 countries. In 2008, the timber industrywas the fifth largest contributor with contribution of 3.3 percent to total exportearnings of Malaysia. Among commodities, timber industry shared about 20.3percent of the export earnings. The major exports of primary products are sawlogs, sawn timber, fibre board and plywood. Secondary processed woodproducts are furniture, builders’ joinery and carpentry together withmouldings. Given the contribution of Malaysian timber sector to Malaysianeconomy, this study sets to assess the experience of timber industry in Malaysiato provide support for export led growth (ELG) hypothesis. This study employsyearly data of real GDP and real export of timber products for the period1979-2008 using Granger Causality approach. Cointegration test usingJohansen approach evidenced the existence of long-run relationship betweenexport and GDP of timber products. Furthermore, Granger causality provesthat export led growth for Malaysian timber industry.