Palm oil and Economic growth in Malaysia

Abstract

The fundamental objective of the study is to estimate the relationship between palm oil and Malaysia's economic development. Time series data over the years of 1990 to 2019 is used for the analysis of the data. Johnson Co-integration analysis and Granger Causality Test are applied to get the results. Outcomes of the Bi-Variant Co-integration analysis show that bi-variant co-integration relation exist between the variable PO TO in the long run. A finding of Pair wise Granger Causality Tests reveals that bi-directional Granger causality is present between the Gross Domestic Product (GDP) and palm oil (PO), LF and GDP, TO and PO. The uni-directional relationship exists between the PO and GDP, DI and PO, LF and PO, LF and DI, LF and TO. Research suggest that exports are a crucial factor in fostering economic development. It is the reason for the development of labour and capital in the world, but also for the expansion of economic growth.