Abstract
The comparative advantage theory of international trade states that countries should export commodities for which they have high comparative advantage and import commodities for which they have low comparative advantage. Analyzing the Halal trade flows for Malaysia’s 11 food/food-related commodities from 1991 to 2012, this study finds an interesting development of the standard view of comparative advantage in the emerging Halal export market. It finds that the greater the country’s current comparative advantage in an exported good, the higher the risk of export diversion (one- or two-way causality) between the Halal market and the conventional market with the country’s expansion of Halal exports; while the diversion risk disappears with lower current comparative advantage. Thus, the study suggests that if a country wants to take advantage of the fast-emerging market, it should aim to expand export of commodities with relatively low current comparative advantage but high demand in the emerging market.
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Notes
- 1.
- 2.
Commodities are selected based on export food commodities list published by FAOSTAT and export data provided by Ministry of International Trade and Industry (MITI).
- 3.
Please see Sect. 122.2 for detail of the list.
- 4.
Instead of comparing the value of trace or max-Eigen statistics against critical value, the p-values are observed here and compared to critical value, of 0.05.
- 5.
Since p-value < (none), the null hypothesis is rejected.
- 6.
As noted previously, result from maximum eigenvalue test should be considered when these two tests show a conflicting result.
- 7.
Hydrogenated oil has chi square value of 0.0033 which is lesser than , thus null hypothesis is rejected.
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Acknowledgements
The research outcome presented in the paper is partially funded by the Halal Ecosystem (HE) Multidisciplinary Platform, Monash University Malaysia.
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Kabir, S., Shams, S., Lawrey, R. (2019). Halal Market Emergence and Export Opportunity: The Comparative Advantage Perspective. In: Xu, J., Cooke, F., Gen, M., Ahmed, S. (eds) Proceedings of the Twelfth International Conference on Management Science and Engineering Management. ICMSEM 2018. Lecture Notes on Multidisciplinary Industrial Engineering. Springer, Cham. https://doi.org/10.1007/978-3-319-93351-1_122
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