Demand for machinery and manufactured goods in Malaysia

This study empirically estimates import demand functions for (i) manufactured goods, (ii) machinery and manufactured articles and (iii) aggregate imports for Malaysia and discusses the implications of the results. Income and price elasticities of demand are empirically estimated using log-linear functional forms and annual data for the period 1979-92. The estimated results show that real income and prices are important determinants of import demand. Imports to Malaysia are, generally income-elastic suggesting that as the Malaysian economy grows, demand for imports will grow at a faster rate. Price elasticities were found to be significant and greater than one in both the import demand equations suggesting that demand for these imported goods into Malaysia is price-elastic.