MANUFACTURING SECTOR AND ITS IMPACT TOWARDS ECONOMIC GROWTH IN MALAYSIA

Every economy in the world will experience structural changes in the economy. The changes may have positive or negative impact on the economic development of a country. Proper insight is needed for policy maker and stakeholder to have a better understanding on the issue to create proper policies for the economy to adjust. Thus this study is conducted to examine the impact of manufacturing sector towards economic growth on selected states in Malaysia for the sample period of 2008 –2018. The methodologies employed in this study is based on panel data analysis which includes Pooled OLS, Fixed Effects Model (FEM), Random Effects Model (REM), Breusch-Pagan Lagrange Multiplier (BP-LM) Test, Hausman Test, panel unit root tests, panel cointegration tests and granger causality test. The empirical result shows there are three unidirectional granger causality among GDP, manufacturing sector wages, manufacturing value added and GDP per capita