The Effect of Tariff on Malaysia International Trade

Yong, Jun Yin (2021) The Effect of Tariff on Malaysia International Trade. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

In the international trade market, all the countries wish to gain the higher benefit from international trade. In this circumstance, each country is imposing the barrier on the trading market protect and gain benefit from the trade. Time past the international trade has created the barriers on trade among the country in the market. And the trade barriers bring the effect to trading countries when trade activities are carried on. This research attempts to examine the trade barriers effect on Malaysia international trade. This research also includes two specific objectives which are to examine the long run relationship between the trade barriers and international trade and to investigate the causal relation between trade barriers, international trade, exchange rate and foreign direct investment. The autoregressive distributed lag (ARDL) test is adopted in the research study to investigate the cointegration and error correction model. The data used in this study is a time series data which covered 35 observations year and covered from year 1984 to 2018 in Malaysia. This paper reveals a positive relation on tariff of international trade in both long run and short run. The finding also shows there is a positive relation between exchange rate and trade in long run but a negative relation in short run. Moreover, the foreign direct investment shows a positive relation to trade in long run and don’t significant at short run.