Impact of economic liberalisation on growth: Evidence from Malaysia

This study attempts to evaluate the impact of liberalisation on Malaysia's economic growth by analysing the 1970-2003 data using cointegration and error correction methods and Granger causality test. The findings suggest that long-run economic growth in Malaysia is largely explained by physical capital, labour force, human capital investment and trade openness. It is also evident that economic growth is not affected by trade, financial and capital account openness in the short run. While trade liberalisation has had a significant positive impact on economic growth in the long run, the effects of financial and capital account liberalisation were rather insignificant.