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Journal of Economic Cooperation and Development, 31, 1 (2010), 17-40

Globalization and the Malaysian Labor Market: An Empirical
Selamah Abdullah Yusof1
Theories have been put forth on the impact of globalization on wages,
employment and productivity levels, of which empirical evidence
provide mixed results on its effects. The existing empirical studies have
largely been either concentrating on developed economies or on
developing countries as a group, and rely mainly on correlation and
standard econometric technique of regression. This paper, on the other
hand, investigates the link between globalization and the Malaysian
labor market by applying the autoregressive distributed lag approach, a
relatively new time-series technique to the analysis. The findings
indicate that globalization does not significantly affect the labor
variables in the long run. In fact, inflow of foreign direct investments is
an “adjusting” variable that reacts to changes in productivity and output
growth. Thus for Malaysia, the main focus should be on upgrading the
skills and productivity of workers, rather than on globalization, to
improve its overall economic growth.
There are variations to the meaning of globalization. In many writings,
the emphasis is on economic globalization. Bhagwati (2004) explains
economic globalization as constituting the integration of national
economies into the international economy through trade, direct foreign
investment, short-term capital flows, international flows of workers and
humanity generally, and flows of technology. Alternatively, it can be
defined as the process in which the combined force of different elements
leading to an increase in countries dependence on or from more positive
point of view of interactions with the rest of the world. It leads to a
progressive integration of the world economy through pulling barrier of
trade, exchange rate and greater mobility of factors of production

Department of Economics, International Islamic University Malaysia, Jalan Gombak,
53100 Kuala Lumpur, Malaysia,

18 Globalization and the Malaysian Labor Market: An Empirical Investigation

(Bhandari and Heshmati, 2005). Thus, economic globalization can be
seen as a process where a mutual interdependence of producers of goods
and providers of services is increasing and where decisions on allocation
of production factors are ever more make globally (Schlamberger,
2004). In short, economic globalization constitutes five distinct elements
- trade, foreign direct investment (FDI), short-term capital flows,
knowledge, and movements of labor. On a wider scope, apart from the
economic aspect, globalization also encompasses the social and political
dimensions. Political globalization is characterized by a diffusion of
government policies, while social globalization is the spread of ideas,
information, images and people (Dreher, 2006).
Various theories have been put forth on the effects of globalization on
the labor market. The neoclassical theory predicts that national
economies will converge in their average productivity levels and
average incomes because of increased mobility of capital. However, it
differs from the endogenous growth theory which argues that
convergence is less likely and divergence more likely because of
differential benefits from economic integration and trade, restricted free
market relations, and developing countries locked into producing certain
commodities (Heshmati, 2003). It is argued that globalization has a
positive effect by helping to develop international trade, thus increasing
employment and domestic product, opening markets, reduced isolation
of less developed parts of the world (Schlamberger, 2004). In addition,
FDI is thought to supply poor countries with markets, transfer
technology and capital, and provide income growth, employment and
poverty reduction. (de Soysa and Neumayer, 2005).
Even so, an application of the Heckscher-Ohlin theorem to human
capital may indicate that although on average there are benefits to trade,
not all groups benefit (Leslie and Pu, 1996). It predicts that increased
trade with countries with an abundance of unskilled labor and the
specialization in skill-intensive production in developed countries leads
to relative losses for the unskilled parts of the labor force (Neumayer
and de Soysa, 2006). Also, along the lines of the Stolper-Samuelson
theorem, Eckel (2003) and Ethier (2002) state that an increase in
commodity trade with unskilled labor-abundant, low-wage countries
leads to an increase in the wage rate of skilled workers and depresses the
wage rate of unskilled workers.

. A similar finding is obtained by Majid (2004) in that there is an initial negative impact of globalization on wages. There are several empirical studies that examine the impact of globalization on wages. while the impact of FDI on wages is positive. In its analysis in the Key Indicators of the Labour Market. both trade and FDI can initially impact negatively on wages. the impact of openness to trade becomes significantly positive (negative impact is offset after 3 years). wages losses could be sizeable. as constructed by Sachs and Warner (1995). particularly in low-skilled occupations. If the opening up of the economy fails to attract foreign capital. and (c) has narrowed the gender gap. For instance. finds that shortterm impact of trade liberalization (measured as ratio foreign trade to GDP) on wages is negative. These results stress the importance of the investment climate. the delocalization of production to developing countries could increase the demand for labor. Rama (2003). he finds that the negative impact is offset after 5 years. using a different measure of openness. (b) is biased towards high-skilled occupations and has a lesser impact on the unskilled and the poor. Besides that. He also finds that FDI is relatively less important than trade for determining wages in developing countries. but this effect dissipates over time and eventually the impact of globalization on wages becomes positive. but they tend to recover within 3 to 4 years of openness. ILO (2005) states that studies have found that the impact of globalization on wages: (a) shows a Kuznets-type relationship whereby globalization initially has a negative impact on wages. Reforms made by countries to become more competitive by dismantling their trade barriers. abolish their legal monopolies. While the impact of FDI on wages fades over time (not significant after 5 years). In developing countries. using data of seventy countries and applying regression techniques. privatize their stateowned enterprises and reduce overstaffing in their bloated bureaucracies could lead to massive loss of jobs and boost unemployment rates. However.Journal of Economic Cooperation and Development 19 Rama (2003) argues that globalization may affect the labor market in two opposite ways. thus expanding employment opportunities and raising workers' earnings. the macroeconomic fluctuations resulting from short-term capital movements could also increase job insecurity. On the other hand.

Using correlation and regression techniques. 1998. it becomes unclear whether globalization actually led to higher unemployment rates. exports increases trend productivity growth.S. Rama (2003) finds that other countries such as Chile. neither international demand shocks nor exposure to international competition are associated with productivity growth. 1997). Mann (1997) instead examines the impact of exports and imports on productivity for the manufacturing industries in two countries. Currie and Harrison (1997) find that in Morocco. 1995. when the initial year of the reforms is modified. However. 2000).. the shift in labor demand was modest. 1997). focusing on the manufacturing industries during 19611991. by temporary and casual workers. She finds that financial globalization has a positive effect on productivity as measured by total factor productivity. despite considerable reduction in employment (Revenga. Maloney and Fajnzylber.S. He also finds that trade liberalization is associated with job losses in formerly protected sectors.S. It is also associated with the replacement of permanent workers. Dasgupta and Osang (2002) also examine the case of the U. where productivity is expected to grow faster in more open economies (Sachs and Warner. imports. Mauritius. Globalization is also assumed to have an impact on productivity. who enjoy fewer benefits. On the other hand. . In Mexico. Reductions in tariffs lead to lower wages in period when trade unions were not active. Krisna and Mitra. employment in the average private sector manufacturing firm was basically unaffected by trade liberalization. They find that a significant variation in the observed increase in the skill premium can be attributed to the impact of globalization. Bonfiglioli (2006) focuses on financial integration and applies GMM dynamic panel technique on annual observations from at most 93 countries over the period 19751999. and the opposite occurs for an increase in U. Sala-i-Martin. there is no strong evidence to support the claim that labor demand has become more elastic as a result of globalization (Chinoy. Poland and Sri Lanka experienced a long period of high unemployment rates after the launching of the economic reforms.20 Globalization and the Malaysian Labor Market: An Empirical Investigation With respect to employment. For Germany. who have a more privileged status. the United States and Germany. the results of the study suggest that an increase in foreign demand for U.

employment and productivity. a relatively new-time series technique to the analysis. and globalization variables. the effect may not be from globalization to labor variables. Malaysia. et al (2001) autoregressive distributed lag (ARDL) approach. Method and Data Firstly. due to different economic structure. this study utilizes time-series econometric techniques to analyze the relationship between wages. and if so. Phillips-Perron (1988) PP and Kwiatkowski et al. The findings will also be useful in providing some observations to Malaysian policy makers in their implementation and evaluation of labor and trade policies. the autocorrelation functions are plotted for both levels and first-difference for a visual inspection and confirmation of the order of integration. The empirical evidence provided in this study can be used to either provide support or invalidate the theories on globalization. In addition. However. the impact of globalization on a country. The order of integration of the variables is determined using the Dickey and Fuller (1979) ADF. may differ from another. Many of these studies either concentrate on developed economies or on developing countries as a group. especially a developing one. focuses on one developing nation. The aim of this study is to contribute to the existing literature on the impact of globalization on the labor market of a developing nation by applying Pesaran. each series/variable is tested for stationarity. instead. or even unidirectional. Hence.Journal of Economic Cooperation and Development 21 The empirical studies on the effect of globalization on the labor market variables rely mainly on correlation and regression techniques. Thus this paper. and perhaps more importantly. It determines whether such link exists. In addition. . and does not require the variables to be integrated of the same order. size and location. as in Johansen (1988) technique. the direction of the relationship. which in turn will have significant policy implications for that particular country. This approach avoids the problem of "spurious regression" arising from the nonstationarity of the variables of interest when standard regression techniques are used. the relationship between globalization and labor variables may not necessarily be contemporaneous. (1992) KPSS tests.

total exports and total imports. official exchange rates. (2001) ARDL method is applied. The Fstatistics computed are compared with the critical values for unrestricted intercept and no trend. real GDP. problems arise in mixing a variety of variables some of which are only very indirect indicators and others for which the interpretation is . For measures that are wider in scope. as reported in Narayan (2005). total exports and imports of goods and services.1 Once it is established. four individual measures are constructed which focus specifically on economic integration. The dynamic relationship is analyzed through the associated ARDL error correction models. and into real terms using the GDP deflator. although more comprehensive. The test for the existence of a long-run relationship in conducted by determining whether the variables are cointegrated using the bounds testing procedure. Pesaran et al. various years) provides data for total salaries and wages paid. and gross domestic product (GDP) contributed by the manufacturing sector. are not without faults. The labor productivity is represented by the ratio of GDP contributed by the manufacturing sector to number of employees and converted into US dollars. The real wage is computed by deflating it with CPI. There are several indices that have been constructed to measure globalization. are converted into US dollars using the official exchange rates. and outflow and inflow of portfolio and direct investments are obtained from the IMF's International Financial Statistics website. the "forcing" and "adjusting" variables are identified by examining the significance of the error correction term (ect) in the error correction representation of the ARDL models.2 Data on consumer price index (CPI).5 or economic integration.4 Productivity. unemployment rate. GDP deflator.3 The salary and wages paid per employee represents the nominal wage.22 Globalization and the Malaysian Labor Market: An Empirical Investigation To establish the link between globalization and labor market variables. The logarithms of wage and productivity are used in the analysis. The quarterly data 1998:1 to 2006:3 that are used for analysis are obtained from two sources.6 The indices representing overall globalization. along with real wage and unemployment rate are the variables of the labor market. For globalization. The Monthly Statistical Bulletin Malaysia (Malaysia. and number of paid employees of selected manufacturing industries. The real GDP.

Empirical Results The results of the ADF. and (iv) total trade which is the sum of total exports and imports. The plot of I(1) level series show a gradual decline while the first-difference series return to zero quickly. all four as a proportion of GDP. Both the ADF and P-P statistics support the hypothesis that productivity and total trade are I(1) and FDI inflow and wages are I(0). findings of any study may depend highly on which index is being used in the analysis. total trade and productivity are I(1) processes. while PP suggests it is integrated of order 1. P-P and KPSS tests also differ for GDP. This is important in formulating the relevant policies for a country. However.Journal of Economic Cooperation and Development 23 open to discussion (Andersen and Herbertsson. Thus. These findings indicate that the variables . These indices produce quite different globalization rankings for the countries in the world or in the OECD. Based on the ADF and KPSS tests. examining individual measures of globalization will help to identify which variables play a key role. and order 1 for FDI inflow. 2003). P-P and KPSS tests on the levels and firstdifferences of the variables are given in Table 1. but for I(0). GDP is I(0). net direct investment and total portfolio investment are integrated of order 0. The four globalization measures used in this study are (i) net direct investment which is computed as the difference between inflow and outflow of direct investments. if any. total trade and productivity are I(1). and GDP. On the other hand. Based on the combined results from all the tests and autocorrelation functions. it can be assumed wage and FDI inflow are I(0). Similar problems are encountered by the index constructed by Andersen and Herbertsson (2003). while the KPSS statistic suggests an integration of order 0 for productivity and total trade. the level series plot return to zero quickly. All the three tests suggest that unemployment rate. in affecting the labor market. The weighting scheme is either completely arbitrary or use some techniques such as factor analysis which are sensitive to changes in the dataset. The results of ADF. (ii) inflow of direct investment. order 2 for wages. (iii) total portfolio investment which is the sum of inflow and outflow of portfolio investments. the autocorrelation functions suggest that wage and FDI inflow are I(0) while GDP. affected by outliers and suffer from small sample problems.

The orders of lags on the first-differenced variables used are 2 and 4. When the variable GDP is included in the model. are now related to the labor variables.4608. through their interactions with output. Table 2 presents the F-statistics obtained for the bounds test of cointegration between labor and globalization variables. GDP is included to determine the interrelationship between the three variables since output may be related to the labor and globalization variables. only the ECMs based on AIC are presented in Table 3 since other criteria also produce the same or similar results. unemployment rate and productivity are cointegrated with each of the four globalization variables. i. Secondly. the relationship between a labor variable and a globalization variable is examined.7 All three . the results still indicate that total trade and net direct investment have no significant effect on the labor variables. Schwarz Bayesian Criterion (SBC). Next. productivity and output. since results may be sensitive to the order of vector autoregression (VAR) as shown in Bahmani-Oskooee and Bohl (2000). the inflow of FDI and total portfolio investment. no assumption is made about the “forcing” or “adjusting” variables. and not vice-versa. The error correction model (ECM) indicates that the changes in inflow of FDI adjust to productivity growth. and R-bar Squared criterion. There is a significant relationship between FDI inflow.24 Globalization and the Malaysian Labor Market: An Empirical Investigation are mixed in their order of integration. Hannan-Quinn Criterion (HQ). and GDP. The outcome varies somewhat with the choice of lag order. On the other hand. This study at the outset assumes no a priori direction of relationship. the inflow of FDI at the 10 percent level. is cointegrated with one of the variables. For the bivariate analyses. however. A larger value for the lag order cannot be applied since the number of observations is not large enough. Productivity.e. To economize space. an analysis is conducted to determine if wages. Quarterly dummies are included since plots of the series indicate that they are seasonal. The lags for the ARDL specifications are based on Akaike Information Criterion (AIC). wages and unemployment rate are not related to any of the four globalization variables. with F(productivity|FDI inflow)=5. Firstly.. thus making ARDL model appropriate for analysis.

both these variables over-adjust. although CUSUM plot stays within the bounds. as shown in Table 5. CUSUMSQ plot does not. and on wage changes. FDI inflow overadjusts. . CUSUM and CUSUMSQ are applied to the residuals of the ECMs to examine the stability of the coefficients. The results also indicate that total portfolio is an “adjusting” variable. As in the previous case. on the other hand. the plots of CUSUM and CUSUMSQ statistics stay within the critical bounds of 5 percent significance level for FDI inflow and productivity equations. In fact. as indicated by the significance of the ects. and with total portfolio. wages and output is given in Table 4. Tests on structural instability on all equations indicate its absence. In the short run. output growth has a positive lag effect on changes in FDI inflow. it is positively affected by unemployment rate. while inflow of FDI and wages adjust to changes in output. is contemporaneously affected by productivity growth. by accommodating to changes in GDP (see Table 6). and the other two variables. FDI inflow and unemployment rate adjust to changes in output to maintain a long-run relationship. With respect to the dynamic relationships. GDP is the forcing variable. Based on the ECMs. both output and productivity growths have lag effects on changes in FDI inflow and productivity. GDP growth has a positive lag effect on inflow of FDI. Productivity and inflow of FDI overadjust. while the speed of adjustment to equilibrium for wages is moderate (0.437). For the output equation.5 percent in the next quarter for a deviation from the long-run equilibrium level in one quarter. while unemployment rate is affected by itself. GDP growth. CUSUM and CUSUMSQ plots indicate no problem of structural instability for all ECMs.Journal of Economic Cooperation and Development 25 variables are not weakly exogenous. In the short run. In the short term. This indicates that there may be some structural instability for this model. which suggest that the coefficients in the ECMs are stable. and more so for unemployment rate. Following Pesaran and Pesaran (1997). while output corrects about 22. The relationship between FDI inflow. The findings as given in Table 2 also indicate that there exist cointegrations between unemployment rate and output with FDI inflow.

rather. Chinoy. wages and unemployment. output growth also influences variations in the total inflow and outflow of portfolio investment. Other studies that show the impact of globalization on labor market such as Rama (2003) and Majid (2004) assume at the outset that the direction of relationship is from trade liberalization (or other globalization measures) to wages. the analysis suggests that unemployment and productivity levels respond very quickly to changes in output. Similarly. The empirical findings of this paper are consistent with those of Currie and Harrison (1997). in fact. The neoclassical theory that mobility of capital will increase average productivity levels and average incomes is not supported. Even that. and Revenga (1997) in that trade liberalization has no significant impact on employment. Maloney and Fajnzylber (2000). and total portfolio investment with unemployment. Krisna and Mitra (1998). but these are mainly through changes in output. on the other hand. There is also no evidence to support other theories on how globalization improves employment and growth. they adjust to changes in GDP and productivity.26 Globalization and the Malaysian Labor Market: An Empirical Investigation Discussion and Conclusion The findings of this study indicate that globalization does not play any significant role in affecting labor variables in the long term. adjusts more slowly to output. These results appear to reject the theories of the effects of globalization on the labor market of a developing country. The results are also in line with the study by Bonfiglioli (2006) on Germany in which productivity is not affected by trade. they over-accommodate for a shock in GDP. . In addition. these globalization variables are not the forcing variables. and not vice-versa. The assumption on the direction of impact must first be tested to determine if it is supported. the variables used must be checked for stationarity to avoid the problem of spurious relationship when standard regression techniques are used. and secondly. Real wage. Higher productivity levels and economic growth attract a bigger inflow of direct investment into Malaysia. and apply simple correlation or regression techniques to produce the necessary results. The inflow of FDI is associated with productivity.

As discussed by Eckel (2003) and Ethier (2002). wages and productivity. and not directly through globalization. skills and creativity to match technological advances in production and services. and depresses the earnings of the unskilled. with proper monitoring and evaluation to ensure that workers are equipped with the knowledge. since unemployment appears to very responsive to changes in output and productivity. there is a need for the policy makers to implement a better social net for the poor to withstand in adverse circumstances. . overall. employment or productivity. and retraining. reforms taken by countries to become competitive by reducing overstaffing in their bureaucracies can be offset by the increase in employment due to the decentralization of production to developing countries. Or. this study shows that expansions in overall growth can be achieved mainly through increases in productivity.Journal of Economic Cooperation and Development 27 The lack of relationship between globalization and labor variables does not necessarily imply that globalization has no impact on wages. the focus of policy-makers must therefore be on the upgrading of skills and productivity of workers for them to attain higher earnings and enjoy higher standards of living. however. these two impacts may cancel each other out. this is subject to availability of data. as discussed earlier (Rama. Further research may focus on the impact of globalization on specific sectors and different levels of workers. Thus. Thus. and a decrease in others. trade may increase the wages of the skilled. In addition. Greater economic integration may increase demand for labor in some sectors or occupations. This study analyzes the impact of globalization on overall levels of (un)employment. A similar argument can also be applied to labor productivity. Notwithstanding this line of reasoning. This can be done through education and training. 2003).

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Huh and Trehan (1995). either at aggregate or sectoral level. 2003). while some others use several indicators including total factor productivity as in Aiginger (2005) to measure labor productivity. Other studies such as Khawar (2003) use the ratio of real gross value of output to labor efficiency unit. labor productivity is often used since it relates to the single most important factor in production and is intuitively appealing. Papapetrou (2001). labor productivity is represented by the ratio of manufacturing output to number of employees. capital and intermediate inputs) (OECD. Productivity measures can be classified as single factor measures (ratio of output to a single input. and is often the case. such as labor or capital) or multifactor measures (ratio of output to a bundle of inputs . [3] http://imfStatistics. or labor. Many studies measure productivity as GDP or output per worker. Equally important. However.labor and capital. and number of employees for all manufacturing industries are not available. BahmaniOskooee and Nasir (2004) and Doyle and O'Leary (1999).6% of the value of gross output of the manufacturing sector in 1993. it may be the only way to measure productivity due to lack of data. in many empirical studies. the critical values for 30 observations are used since that is the minimum number of observations reported in Narayan (2005). Spithoven. Data on wages and salaries for all workers in Malaysia are also not available. 2001. Wakeford (2004).32 Globalization and the Malaysian Labor Market: An Empirical Investigation Endnotes [1] Since the number of observations in this analysis ranges from 26 to 29. Alexander (1993). due to data [4] Productivity is commonly defined as a ratio of a volume measure of output to a volume measure of input. Bahmani-Oskooee and Miteza (2004). However. as in Darby and Wren-Lewis (1993). . In this paper. [2] The data on wages and salaries. the data reported in the Bulletin are based on establishments that accounted for most of the production in the various manufacturing industries and represents 77.

personal contact. and political engagement (Heshmati. FDI. international telephone traffic.economic. foreign investment. and secure servers are used to measure technology.) and an indirect effect. i. .e.. etc. while number of internet users. 2003). On the other hand. the extent to which the institutional setup in different countries allows for participation in global activities (freedom to trade with foreigners. social and political. freedom to use alternative currencies. such as that by KOF Swiss Economic Institute (Dreher. and across borders money transfers. 2006) which includes three dimensions of globalization . personal contact consists of international travel tourism. Heshmati (2003) also uses data from Kearney to construct a similar index but using principal component technique to determine the weights. and freedom to exchange in international capital and financial markets) and apply factor analysis so that the weighting of various variables is based on statistical methods rather than a priori judgments. the direct effect. and income payment and receipts.Journal of Economic Cooperation and Development 33 [5] These include the Kearney index which attempts to incorporate four components in measuring globalization – economic integration. There are other composite measures of globalization. i. They examine two dimensions of globalization. and political engagement is represented by the number of international organizations and UN Security Council missions in which each country participates and the number of foreign embassies that each country hosts. [6] An index constructed by Andersen and Herbertsson (2003) focus on economic integration of the goods and capital markets and provide an index indicating the relative globalization of OECD countries.e. [7] The same applies to the ECMs presented in Tables 4-6. internet hosts. how countries use the opportunity of integrating into the world economy (trade. portfolio capital flows. technology. rather than the ad hoc basis utilized by Kearney index.. Economic integration includes trade.

382 -9.004) Total portfolio -4. ADF Variables Level P-P 1 st Level difference Productivity KPSS 1 st Level difference -3.000) Net foreign -6.102 0.000) Unemployment -4.071) (0.087 investment 0.234 rate (0. respectively.000) (0. 5 and 1 percent levels.817 - (0.586 -4.072 0.338*** 0.0031) (0.004) GDP -3.314 -8.336 -6.332 -16.754 -5.084 0.000) Total trade -2.005) (0.048 (0.729 -4.004) (0.557 direct (0.078) (0.000) 13.4045) (0.042) (0.711 (0.734 investment (0.237 -2.104 Notes: Numbers in parentheses indicate p-values. 0.362 -6.193** (0.000) Log real wage -5.000) Inflow of -4.655 foreign direct (0.086 0.000) (0.561 1st difference 0.081) (0. *.392) (0.000) (0.647 -3.524 -3.664 -6. ** and *** indicate significance at 10.266 (0.000) 0.34 Globalization and the Malaysian Labor Market: An Empirical Investigation Table 1: Tests for Unit Roots – Augmented Dickey-Fuller PhillipsPerron and Kwiatkowski et al.137* investment 0.500 .

393 FDI inflow GDP 6.141 0.245 1.529 2.997 1.318 0.659 Lag 4 15.0730 1.341 4.795 2.404 8 Wages Total portfolio GDP 2.973 2.504 2. respectively. 5 and 1 percent levels.800 0.058 10 11 12 Unemployment rate Total portfolio GDP Notes: *.758 0.373 5.832 4.642 3 Productivity 4 5 6 7 Wages FDI inflow GDP Lag 2 4.992 Wages 2.35 Journal of Economic Cooperation and Development Table 2: Bounds test for Cointegration – F-statistics 1 Productivity Total trade GDP Lag2 1.160 1.201 GDP 0.007 1.321 0.453 0.446 0. .706 1.365 0.799 Unemployment rate FDI inflow GDP 4.034* 0.849 0.413 2.284 Unemployment rate Net FDI 1.358 2.074 1.526 1.597 0.801 0.138 0.337 Productivity 9.061 2.725 1.902*** 3.927 .571 4.364 0.316*** 8.987 1.770* 0.645 0.476 9 2.639*** 40.824 1.178 Lag 4 1.498* 0.599 1.225 Total portfolio GDP 3. ** and *** indicate significance at 10.666* Net FDI GDP 1.573 Total trade GDP 0.199*** 0.616 2 Productivity Net FDI GDP 2.584 0.491 Unemployment rate Total trade GDP 0.065 0.909 Wages 3.622*** 47.636 1.843 3.934** 1.332 0.868 2.785 0.

071) -2.114 (.028 (.038 (.012 (.022) 0.001) 0.455 (.00 (.811 dProd(-1) dProd(-2) dGDP dGDP(-1) dGDP(-2) Constant dQ2 dQ3 dQ4 ect(-1) dFDIinflow 0.053) -0.099 (.020) 0.358) -0.000) -0.000) 0.921 F DW 51. Productivity and Output Dependent: dProd R2 0.305) -2.294) -0.179 (.979) 0.285 (.207 (.009) -1.599) 0.521 (.524) -0.977 F DW 7.457 1.851) 1.020) 0.293) -1.566 (.025 (.786 .746 1.223 1.049 (.038 (.766 F DW 5.242 (.371) 0.003 (.548) -0.160 (.36 Globalization and the Malaysian Labor Market: An Empirical Investigation Table 3: Error Correction Representation for the Relationship between FDI inflow.636 R2 dProd 1.048) -0.647) -1.576) 0.291 (.042) 1.051 (.038) -0.226 (.225 (.417 (.000) Dependent: dProd(-1) dProd(-2) dProd(-3) dGDP dGDP(-1) dGDP(-2) dFDIinflow dFDIinflow(1) dFDIinflow(2) dFDIinflow(3) Constant dQ2 dQ3 dQ4 ect(-1) Dependent: dFDIinflow dProd Constant dQ2 dQ3 dQ4 ect(-1) dGDP 0.491 (.015) 1.152 (.020 (.000) 0.011) 0.001) R2 0.066) 0.000) 0.031) 0.487 (.248 (.00 (.043) 1.954 (.178 (.773 (.082 (.

063 dQ4 Constant 0.258) dWage dFDIinflow (.153 DW 1.144) ect(-1) -1.032) 0.232) -0.047) dGDP(-3) -0.087) (.112) dGDP(-2) 0.037) dFDIinflow (.056 (.385 Constant -0.179 F 59.000) (.157 dGDP 0.148) (.157 dGDP 0.396 (.465) 0.587 DW 1.931 R2 0.031 (.051) (.183 DW 2.666 F 23.178 dQ3 0.37 Journal of Economic Cooperation and Development Table 4: Error Correction Representation for the Relationship between FDI inflow.065) dQ3 0.05 0.000) dQ4 0.000) (. Wages and Output Dependent: dFDIinflow Dependent: dWage Dependent: dGDP dGDP 0.336 (.070 -0.692 (.437 dQ2 dQ3 0.000) R2 0.120) (.809) dQ2 dWage (.078) dQ4 0.068 (.33 (.280) Constant 1.130 (.181 dQ2 -0.053 0.040) (.632 R2 0.079 (.866 .038) ect(-1) (.670) (.552 (.606) dGDP(-1) 0.053 (.761 0.029 (.857 F 6.15 ect(-1) -0.639 0.210) (.

105) -7.620 (.422 (.023) 1.007 (.249) -0.863 20.003 (.134 (.688 6.184 2.184 (.167 (.228) 0.044) 0.014 (.070 (.637 4.225 .330 (.181 (.242) -9.714 (.329) -0.862) -1.212 (.279 (.000) 0.591) 0.082) 6.216) 0.821 (.081 (.682) 0.408 (.293) 0.590) -0.303 (.037) -2.941 (.693) 0.029 (.027) 15.398 (.801) 0.581) 0.016) 0.886 2.075) -0.028) 10.043 (.058 (.38 Globalization and the Malaysian Labor Market: An Empirical Investigation Table 5: Error Correction Representation for the Relationship between FDI inflow.000) Dependent: dGDP dURate(-1) dURate(-2) dURate(-3) dFDIinflow dFDIinflow(1) dFDIinflow(2) dFDIinflow(3) Constant dQ2 dQ3 dQ4 ect(-1) R2 F DW 0.078 R2 F DW dURate 1.057) -0.733 (.064 (.001) 0.182) -0.246 (.700 Dependent: dGDP dURate dFDIinflow dFDIinflow(1) Constant dQ2 dQ3 dQ4 ect(-1) R2 F DW dGDP 0.003 (.567 (.106 (.792 (.016 (. Unemployment Rate and Output Dependent: dGDP dGDP(-1) dGDP(-2) dURate dURate(-1) dURate(-2) dURate(-3) Constant dQ2 dQ3 dQ4 ect(-1) dFDIinflow -0.009 (.000) 0.236) -0.114) -0.046 (.186) -0.743 1.000) 0.244 (.076) 0.089) 0.

303 (.276) 0.700 1.006) Dependent: dGDP dGDP(-1) dTotalport dTotalport(1) dTotalport(2) Constant dQ2 dQ3 dQ4 ect(-1) dURate 6.350) 0.596) -0.010 (.084 (.059) -11.000) 0.713 (.392) -1.323 (.180) 0.241) 0.725 R2 0.102 (.529 (.034) -0.474) -0.534) -0.339) -0.345) 0.006) 0.121 (.582 dURate dURate(-1) dTotalport(1) dTotalport(2) dTotalport(3) Constant dQ2 dQ3 dQ4 ect(-1) dTotalport -0.175 (.660 (.142) -2.670) 0.115 (.021 (.327) -18.083) 0.406) 0.081 (.588 R2 dGDP 0.153) 0.017 (.907 (.008 (.001) -1.280 (.045 (. Unemployment Rate and Output Dependent: dGDP R2 0.078 (.010) 1.027 (.264 (.256 (.028 (.014) 0.870 F DW 5.439) 0.078 2.007) 0.289) -0.037 (.087) -1.) Dependent: dGDP(-1) dGDP(-2) dGDP(-3) dURate dURate(-1) dURate(-2) dURate(-3) dTotalport dTotalport(1) dTotalport(2) Constant dQ2 dQ3 dQ4 ect(-1) .350 2.081 (.464) -0.635 (.169) -3.565 (.078 (.125 F DW 14.299 (.469 (.503 (.881 F DW 7.270 (.007) 1.009 (.001) 0.098 (.Journal of Economic Cooperation and Development 39 Table 6: Error Correction Representation for the Relationship between Total Portfolio Investment.246 (.044) -0.437) -0.000 (.114) 0.