ARE IMPORTS AND EXPORTS IN THE OIC MEMBER COUNTRIES COINTEGRATED? A REEXAMINATION

Tuck Cheong Tang

doi:10.31436/ijema.v14i1.118

Authors

Tuck Cheong Tang School of Business, Monash University Malaysia, 2 Jalan Kolej, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan, Malaysia (e-mail: tang.tuck.cheong@buseco.monash.edu.my)

DOI:

https://doi.org/10.31436/ijema.v14i1.118

Abstract

Applying the recently developed unit root tests with unknown level shift (Lanne, Lutkepohl and Saikkonen, 2002; Saikkonen and Lutkepohl, 2002) and the cointegration test with structural break (Gregory and Hansen, 1996), this study reinvestigates the cointegration relationship between imports and exports for the Organization of the Islamic Conference (OIC) member countries as in Tang and Mohammad (2005). It is found that restrictions are not applicable for testing cointegration between imports and exports for OIC member countries. Interestingly, this study shows cointegration between exports and imports for 9 of the 27 selected OIC member countries (Bangladesh, Cameroon, Chad, Guyana, Indonesia, Mali, Morocco, Niger and Senegal) compared to only 4 countries as demonstrated by Tang and Mohammad (2005). Consequently, relevant policy implications are also discussed in this study.

JEL classification: F14, F35

Key words: Cointegration, Structural break, Organization of the Islamic Conference (OIC)