DOI: 10.36347/sjebm.2016.v03i12.005

Pages: 669-679

There is a large literature that relates trade openness and economic growth. My literature survey suggests that Malaysia’s WTO accession, active participation in regional trading agreements, trade policy reform in agricultural and manufacturing sectors, government reforms encouraging economic competitiveness and lower trade cost are among the main reasons for explaining Malaysia trade performance and openness. Apart from the role that trade openness has played in Malaysia’s economy, this paper’s gravity model empirical regression results suggest that other factors such as distance, per capita income in Malaysia and its trading partner and exchange rate also explain significantly Malaysian trade performance with its regional counterparts, namely the major ASEAN and Australasian countries.