Abstract
ABSTRACT This study attempts to improve Malaysia’s aggregate import demand functions by considering disaggregated imports using import data classified by broad economic categories (BEC). The results suggest that the deeper the country’s involvement in international production sharing, the less essential relative prices will become. Economic growth driven by the electric industry might not harm the trade balance. However, an increase in domestically produced transport equipment might negatively affect the trade balance. Thus, developing and facilitating domestic production in the automobile industry is essential, and the government is advised to design policies to promote relevant industries.
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