International Trade and Economic Growth: An Evidence from Malaysia

The main objective of this study is to examine the relationship of international trade and the economies of Malaysia by adopting the secondary data in the form of annually time-series data that is from 1990 to 2020. This study is conducted by using the unit root tests, cointegration test and Granger causality test. The variables that brought into this study are balance of trade, trade openness, exchange rate and gross domestic product. Based on the findings, most variables are stationary after first differences and non-stationary at level. The result had also demonstrated the presence of cointegration relationship in Malaysia. The results had shown that the balance of trade and GDP, as well as the exchange rate and GDP have a positive relationship whereas trade openness and GDP indicate the existence of a negative interaction, which is contrary to economic theory