Energy Essential in the Industrial Manufacturing in Malaysia

Hussain Ali Bekhet, Nor Hamisham Binti Harun

Abstract


The purpose of this paper is to examine the causality relationship between production and energy of industrial manufacturing in Malaysia. Time series data for production (Q), capital (K), labour (L) and energy (E) for the 1978-2009 period, are applied. However, production theory was used to explore the characteristics of the capital, labour and energy within time series procedures. The results of the ADF and PP tests show that all variables are stationary in the first differences, except for energy, which is stationary at second differences. Meanwhile, all variables are cointegrated at 1% significance level using CRDW test. Results show that there is unidirectional causality in the long run running from energy to the production. Therefore, energy plays an important role in the production of industrial manufacturing in Malaysia. No significant relationship between all variables appears to be in the short run.


Full Text: PDF DOI: 10.5539/ijef.v4n1p129

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

Copyright © Canadian Center of Science and Education

To make sure that you can receive messages from us, please add the 'ccsenet.org' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.