Economic growth and government spending in Malaysia: a re-examination of Wagner and Keynesian views

By making use of annual data from Malaysia for the period 1970 to 2006, this paper examines Wagner’s law and the Keynesian hypothesis concerning the link between real government spending and real GDP. Unlike most existing studies, we utilize both a bivariate and a multivariate model. In addition, we consider two cases: one that focuses on the link between aggregate government spending and GDP and the other where the link between government spending on education and GDP is considered. The use of a multivariate model serves to reduce the problem of serious misspecification which appears to have been ignored by most existing studies. The presence of cointegration is investigated by means of Auto Regressive Distributed Lag (ARDL) approach. This approach also allows one to distinguish between the short and the long-run relationships. Within the context of a bivariate model, our empirical analysis reveals that aggregate government spending Granger causes the real GDP which supports Wagner’s law. However, in a multivariate framework, we found support for the Keynesian hypothesis suggesting that omitted variables bias can significantly alter the validity of Wagner’s law.     

On David Miller on immigration control

David Miller offers a liberal realist defence of immigration control grounded in cosmopolitan ideals of self-determination, fairness and integration. But a commitment to liberal values requires a commitment to more open borders than he admits. A part of the problem is that the notion of open borders Miller criticises is under-theorised. A deeper problem is that immigration control itself is inconsistent with important liberal values – notably the values of freedom and equality. This is a concern because it is the freedom and equality not only of immigrants but also of citizens that is threatened by the closing of borders.     

On Sen on comparative justice

Against scepticism from thinkers including John Rawls and Thomas Nagel about the appropriateness of justice as the concept through which global ethical concerns should be approached, Amartya Sen argues that the problem lies not with the idea of justice, but with a particular approach to thinking of justice, namely a transcendental approach. In its stead Sen is determined to offer an alternative systematic theory of justice, namely a comparative approach, as a more promising foundation for a theory of ‘global justice.’ But in the end Sen offers no such thing. He does not develop a theory of justice and this is all to the good; for if values are plural in the way Sen suggests, then justice is not a master idea but one value among many, and it should be neither the first virtue of social institutions, nor the notion that frames all our reflections on ethical and political life.     

Crisis Effects on the Electronics Industry in Southeast Asia

The financial crises of 1997–98 and 2008–09 each had a debilitating effect on Southeast Asian market economies because of the dominance of exports and foreign ownership. However, the 1997–98 financial crisis positively impacted electronics exports, production and employment, due to a booming US economy. The contraction in demand in the US during the 2008–09 crisis reduced electronics exports from Southeast Asia with the exceptions of Indonesia and the Philippines, which were shielded by regional linkages with Singapore, Malaysia and China. Foreign labour repatriation and fiscal stimulus packages helped Malaysia and Thailand rebound quickly from the 2008–09 crisis. In the Philippines, the 2008–09 crisis expanded further the casualisation of labour as retrenched workers from Malaysia and Singapore returned home. State grants encouraged upgrading in Singapore and to some extent in Malaysia, but the liberal approach of Indonesia, the Philippines and Thailand limited them to low-value-added activities. However, Singapore’s and Malaysia’s transnational-based strategy failed to reproduce the technological leapfrogging experience of South Korea and Taiwan. Also, Malaysia’s ethno-patronage policies discouraged upgrading in national firms.