Abstract

The purpose of this study is to examine the impact of macroeconomic factors such as GDP, CPI, TRGDP and ERon exports between Malaysia and other OIC countries using a panel data for the period of 1997-2012. The panelunit root tests have been applied to confirm the stationarity and level of integration. The overall unit root tests(Dickey & Fuller, 1979; Im, Pesaran, & Shin, 2003; Levin, Lin, & James Chu, 2002) result shows that all thevariables are stationary at level and become non-stationary after taking first difference. The Kao cointegrationtest results approved the cointegration among the panel of proposed countries. After confirm the stationaritylevel and cointegration FMOLS test is employed to analyze whether a long run relationship between variablesexist. The results obtained show that only GDP, TRGDP and ER have significant effect on exports. In examiningthe short-run relationships among variables, a panel ECM is the applied and it is observed that only ER andTRGDP have positive effect on exports. Results from this study can be used as guidance for policy makers onexports where government can give more attention on both ER and TRGDP to influence exports in the short run.

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