## METHODOLOGY

## 3.0 Introduction

This section conquer sift-canvass the considerd techniques theories and the equation, it is embody the Item parent proof and Autoregressive As sorted Loiter (ARDL) Frisks proof. And the basis sources so sift-canvass in this portio.

## 3.1 Endogenous fruit theory and designing

In the economic proviso, the Cobb-Douglas characteral devise of consequence characters is invariably correctiond to reproduce-manifest the kindred of an extinguishedput to inputs. It was predictefficacious by Knut Wicksell (1851-1926) and proofed aggravate statistical averment by Charles Cobb and Paul Douglas in the years of 1900-1928. The consequence character is lovenessn as inferiorneath:

Y = ALÎ±KÎ², (1)

Where the mark of transformation restraint the Cobb-Douglas character is:

= Whole consequence (the monetary esteem of entire movables enacted in a year)

= Effort input

= Dignified input

= Whole consequenceivity fruit

The and are the extinguishedput elasticity of effort and dignified concomitantly. These esteems are immutefficacious immovefficacious by serviceefficacious technology.

Restraint extinguishedput eleasticity the receptiveness of extinguishedput to a transmute in rolls of twain effort and dignified correctiond in consequence in the proviso of ceteris paribus. Such as if =0.20, it conquer loveness that the 1% extension in effort conquer administer to a 0.2% extension in extinguishedput.

Î± + Î² = 1,

These character declare that the immutefficacious repay to layer in consequence character. That resources if L and K are each extension 30%, Y conquer extension in 30% besides.

If the repay to layer are decreasing and repay to layer are increasing, this conquer be loveness as inferiorneath:

Await it on the blameless rivalry, the and can be declare to be the twain effort and dignified divide of extinguishedput.

The Cobb-Douglas character are influnced by statistical averment that following into appearance to loveness that effort and dignified divides of whole extinguishedput are immutefficacious aggravate age in plain countries, the learningers separated this by statistical right last squares retreat in their consequence character. It is loveness that having vacillate aggravate whether continuity aggravate age insists.

Except according to Yao and Wei (2007), through flexure ventures persomal strongs entertain been efficacious to mock restrainteign technologies and agoing to amount their admit designs or afford portios to restrainteign industries. There is no vacillate that FDI has referable attribumotive attribumotive attribumotive attribumotive attribumotive attribumotive attributpotent attributpotent attributpotent barely helped amelioscold the consequence achieveingness of domiciliary strongs except so helped to press-opposing Korea’s consequence frontier towards the world’s most slow rolls. Suppose that there are couple countries in the world: idiosyncratic is an industrialized rule A and the other is a upstartly industrializing rule (B) and twain countries conquer prosper a Cobb-Douglas consequence technology:

(2)

Where Y, K, L are respectively to GDP, dignified and effort, j and t delineate doocean (A, B) and age. And g(z) is a character of sundry factors coercioncible consequence achieveingness and the consequence frontier, including ship-produces, civilized dignified, FDI, institutions and others. As doocean A is richer and has a conspicuous K/L association than doocean B, doocean A tends to gain endowments in B in ordain to maximize repays to dignified, as desire as âˆ‚YBt /âˆ‚KBt > âˆ‚YAt /âˆ‚KAt restrains penny.

According to Yao and Wei (2007), in this couple-doocean perspective, twain countries should entertain alternate services restraint cross-bordain substitute-of-situate of dignified to select situate. The service restraint A is that it can maximize repays to its dignified and has appropinquation to B’s commerce. The service restraint B is that it can entertain appropinquation to A’s technology and amelioscold per capita infollowing so that the infollowing deflexion incompact A and B declines aggravate age. Another certainty is that twain countries endow in truth and technology to invent scholarship and novelty. However, consequently A has amelioscold endowments in twain substantial and civilized dignified, it is further efficacious to innovate and future amount a conspicuous roll of extinguishedput attached the common roll of inputs in similitude with B. The barely habit restraint B to wane this technological deflexion is through union of A’s technology embedded through FDI.

Except repeatedly from according Yao and Wei (2007) that the role of FDI can praise by their couple divorceicularizements. Highestly, they attached the common undeviating propound of B’s technology, FDI can amelioscold B’s consequence achieveingness consequently restrainteign endowed strongs are front confuseners in the election of GPTs consequently of their conspicuous civilized dignified, government and organizational building. Domiciliary strongs can be trained from restrainteign endowed strongs through tuition by watching. They so entertain incentives to befollowing further versed and competitive consequently they misgiving losing extinguished to restrainteign endowed strongs.

The tender commodities of FDI on consequence achieveingness of B can be illustrated in Figure 1. Consequence frontier of A and B, delineates the consequence frontier of B. At a undeviating propound when input is urban at X0, the genuine roll of domiciliary consequence is Yd0 withextinguished the commodities of FDI. If FDI has a unroving collision on consequence achieveingness at this undeviating propound, or âˆ‚YB/âˆ‚FDIB > 0, the genuine roll of consequence conquer soften to Yf 0. The entrap tender commodities of FDI on doocean B’s consequence is (Yf 0 âˆ’ Yd0). Succor divorceicularizement explore that FDI is a shifter of the domiciliary consequence frontier. If FDI does referable attribumotive attribumotive attribumotive attribumotive attribumotive attribumotive attributpotent attributpotent attributpotent entertain a mutation commodities, the ultimatum extinguishedput of B can never go aloft PFB. If FDI has a mutation commodities, doocean B’s ultimatum immanent extinguishedput can be as proud as those located on PFA, which is the consequence frontier of A. (Cobb-Douglas. Wikipedia. Retrieved April 20, 2010, from: http://en.wikipedia.org/wiki/Cobb%E2%80%93Douglas)

## Figure 3.1: Consequence Frontier of A and B and the role of FDI in B.

Y PFA

Yft

PFB

Ydt

Yf0

Yd0

0 X0 X1

X

Restraint fruit, withextinguished a mutation commodities, the genuine roll of consequence may propose from Yf 0 at the modescold undeviating propound to Ydt at the upstart undeviating propound with a upstart input knead Xt. The ultimatum lovely extinguishedput of B at the upstart roll of input conquer be on PFB or inferiorneath. If FDI has a mutation commodities, the genuine roll of extinguishedput can go aloft PFB, with a ultimatum immanent extinguishedput to be on PFA. In Fig. 1, if the upstart genuine extinguishedput is Yf t , which is situated incompact the couple frontiers, it resources that the consequence frontier of B has been shifted towards PFA from PFB. This unroving mutation commodities can be exposed as âˆ‚YB/âˆ‚FDI = f (t)>0, implying that the marginal consequence of FDI is an increasing character of age (Yao and Wei, 2007).

According to Yao and Wei (2007) declare that with Divorceicularizements 1 and 2, doocean B’s consequence character can be rewritten as:

(3)

And FDI is portio of the multiplier ABt adesire with a unroving of other waverings Z1 which can so amelioscold consequence achieveingness. Besides, FDI enters the residual account to be a shifter of the consequence frontier adesire with other waverings, including a age bear t , which captures the Hick’s inunanalogous technological proficiency in B in the scantiness of FDI or restrainteign technologies, t * FDI captures the joined technological proficiency that is attributed barely to FDI. The whole commodities of FDI on economic fruit in doocean B can be exposed as:

(4)

The highest portio on the right-hand laterality of (4) measures the tender commodities, and the succor portio the mutation commodities of FDI on YB. If twain commoditiess are unroving and cecible, the aloft couple divorceicularizements restrain penny.

While the transmitted fruit theory considered barely couple factors of consequence, namely dignified and effort, this upstart fruit theory adds a third, technology. Endogenous fruit theory or upstart fruit theory convergencees on the travel concept of technology, which is exposed through ideas, instead of objects or consequences. It necessitates a unanalogous unroving of institutional arrangements, love pricing systems, taxation or incentives to determine the causative entireocation of ideas. These images of designs are casually denominated Schumpeterian designs consequently Schumpeter emphasized the consequence of limited monopolistic goodsiveness aggravate discoveries, as a motivating restraintce restraint continued innovative mode.

A sublime chaffer of averment has been enacted in new-fangled years casting vacillate on endogenous fruit theory. Mankiw, Romer and Weil (1992) imply that the neoclassical fruit deprefiguration of Solow and Swan with exogenous technological proficiency and powerless repays to dignified, expounds most of the cross-doocean alteration in extinguishedput per idiosyncratic. The Schumpeterian unequivalent of endogenous fruit theory that emphasizes technological proficiency, novelty and R&D has following inferior portioicularly cumbrous energy.

Endogenous fruit designs nerve to expound a sublimeer symmetry of observed fruit as well-mannered-behaved-behaved-behaved as why unanalogous countries experiment unanalogous fruit scolds. They openly correction the neoclassical deprefiguration except entireow the consequence character to manifest increasing repays to layer, convergence on palpableities and suppose that technological transmute, although dignified, is referable attribumotive attribumotive attribumotive attribumotive attribumotive attribumotive attributpotent attributpotent attributpotent indispensable to expound desire-confverification fruit. In 1986, tractate of Romer ignores substantial dignified and barely considers ‘knowledge’ except a open devise of his deprefiguration can be written as:

Y = A(R) F (Rj, Kj, Lj) (5)

Where R j, K j and L j are, respectively, fund issues from learning and fruit extinguishedgoings by strong j, substantial dignified of strong j and effort of strong j; R is the collection fund of scholarship. Any special learning exertion conquer entertain a spillaggravate commodities restraint the generally-known fund of scholarship A(R). This image of deprefiguration can expound why countries experiment unanalogous fruit scolds. A doocean with an modescold conspicuous roll of K experiments a conspicuous scold of fruit of K administering to a conspicuous scold of fruit of per capita infollowing consequently such a doocean is further ‘experienced’ through ‘tuition by doing’. This is an palpable commodities that prevents powerless repays.

## 3.2 Deprefiguration localation

The antecedent experimental studies entertain proved that GDP can be immovefficacious by the prospering waverings: effort and dignified as basic substantial inputs; ship-produce, FDI and restrainteign extransmute scold device as waverings of artlessness. The prospering deprefiguration retreat conquer embody entire these waverings.

(6)

Where t (t = 1976, … , 2008) delineate year t, k and l dignified fund (Shameful urban dignified hoard) and whole effort restraintce, fdi = FDI inflow, exp = whole ship-amount and exc = genuine extransmute scold. Lastly, the Y is the Shameful domiciliary consequence in economic fruit and the is fault account.

Basis restraint GDP are shameful domiciliary consequence and dignified is calibrated inferiorneath inveterebuke on endowment in urban possessions. Entire the waverings are conducive in 2000 immutefficacious figures. GDP is adventitious from genuine GDP annual refutationes by domain. Effort is whole effort restraintce in each domain. FDI is genuinely correctiond FDI inflows. Ship-amount is the whole esteem of ship-produces.

The tidings of FDI in the consequence deprefiguration needs mindful consequence. Consequently dignified fund is the hoard of urban asunroving endowment, which embodys twain domiciliary and restrainteign endowments, the consequence character would be mis-specified if FDI, either measured as a confverification or fund, were ascititious as another explanatory variefficacious adesire with dignified fund. In the antecedent erudition, ship-amount and extransmute scold so has been be-up to be apt waverings in the consequence character. Love FDI, ship-amount is defined as whole FDI inflows and whole ship-amount in Korea future can commodities to extinguishedput.

The esteems of ship-produces and FDI are granted in US dollars (USD) in the authoritative statistics. Since they are measured in US dollars, most economic analysts do referable attribumotive attribumotive attribumotive attribumotive attribumotive attribumotive attributpotent attributpotent attributpotent twainer to deflate the esteems in floating figures into esteems in immutefficacious figures (e.g. Liu et al., 1997; Liu, 2000). It is dignified to frequented an alienate deflation. Idiosyncratic apt deflator is the US consumer figure refutation. The esteems of commerce and FDI in professed dollars are deflated by this refutation. Since entire the other waverings in the deprefiguration are measured in KRW100, it is correctionful to transmute these couple waverings in KRW as well-mannered-behaved-behaved.

Extransmute scold is genuine extransmute scold, which is age-unequivalent except location-inunequivalent as entire the domains faced the common restrainteign extransmute scold. Belaterality this, genuine extransmute scold should be adventitious from the extransmute scolds and figure refutationes of Korea’s ocean trading portioners. However, since KRW prospers the US dollar very closely, albeit referable attribumotive attribumotive attribumotive attribumotive attribumotive attribumotive attributpotent attributpotent attributpotent pegged to the dollar, barely the dollar extransmute scold and the US figure refutation are correctiond to blame the genuine extransmute scold. Genuine extransmute scold is awaited to entertain a unroving prefiguration govern on economic fruit consequently it reproduce-exhibits China’s competitiveness in interpolitical commerce and the magnitude of commerce liberalization in the restrainteign extransmute commerce from Yao and Zhang (2001). The awaitancy issue restraint the variefficacious of dignified fund, effort, civilized dignified, FDI, ship-amount and genuine extransmute scold are await getting the cecible and unroving kindred to economic fruit.

## 3.3 Experimental arrangementology

## 3.3.1 Item parent proof

A item parent proof is life-supporting in observing the stationery of age train basis. It is ocean to consider abextinguished the waverings observed entertain a proclivity to repay to the desire account bear prosper a offend (stationery) or the waverings prosper a wild step which containing a item parent. If the waverings prosper a wild step following a limited or enduring offend, the retreat incompact waverings is supposititious (Amiruddin, Nor and Ismail 2007). According to the Grauss-Markov’s theorem, in such facts, the train do referable attribumotive attribumotive attribumotive attribumotive attribumotive attribumotive attributpotent attributpotent attributpotent entertain a frisked estrangement. Future the OLS conquer referable attribumotive attribumotive attribumotive attribumotive attribumotive attribumotive attributpotent attributpotent attributpotent amount consonant parameter considers.

A fixed train is idiosyncratic whose basic properties, restraint fruit it balance and its estrangement, do referable attribumotive attribumotive attribumotive attribumotive attribumotive attribumotive attributpotent attributpotent attributpotent transmute it aggravate age. In opposition, a non-fixed train has idiosyncratic or further basic properties that do transmute aggravate age. If the age train variefficacious is stationery,

i) The balance of is immutefficacious aggravate age

ii) The estrangement of is immutefficacious aggravate age

iii) The mere interdependence cocausative incompact and depends on the tediousness of the loiter (k) except on no other variefficacious (restraint entire k).

The item parent proof can sepascold into 2 proof, that is Augmented Dickey Fuller (ADF) proof and Phillips Perron (PP) proof. This conquer proof restraint roll (primordial train), highest dissimilaritys and succor dissimilaritys (changes). If fixed at roll, then the train are integrated of ordain not attribumotive attributablehing, I(0) and if fixed at highest dissimilaritys and succor dissimilaritys, the train are integrated of ordain idiosyncratic and couple, I(1) and I(2) respectively.

The Augmented Dickey-Fuller proof statistic and Phillips-Perron proof statistic to consider the fixed restraint the waverings. The issues are and the theory conquer declare as inferiorneath:

## Hypothesis:

Ho: No fixed

Ha: Fixed

Hence, p-esteem should smentire tahan 0.05, then uncommon Ho, that is fixed, if scarcity to repudiate Ho, that resources no fixed].

## 3.3.2 Autoregressive as sorted loiter (ARDL)-Frisk proof

The Frisk Proofing Arrangement can correction to consider the smentire magnitude fact basis in incompact 30 observations. Future, idiosyncratic of the provisos is the contingent waverings must be in I(1) and the contingent waverings can be kneaded in I(0) and I(1), except referable attribumotive attribumotive attribumotive attribumotive attribumotive attribumotive attributpotent attributpotent attributpotent the I(2). Restraint fruit: Y=a+b1X1+b2X2+b3X3+e. The variefficacious Y must fixed at ordain idiosyncratic or I(1) and the X1,X2 and X3 can be in I(0) or I(1) or kneaded. Restraint the sincerity, the Frisk proofing can be lovenessn as:

(7)

The Autoregressive As sorted Loiter (ARDL) arrangement plain by Pesaran et al. (2001) was correctiond to plant co-integration kindreds incompact the waverings. And it can correction to aggravatefollowing the fixed whole in the age-train retreat. The custom of the ARDL arrangement is it can be applied to the deprefiguration whether the incontingent waverings are fixed at I (0) or I (1). The contingent variefficacious must fixed in I (1). As a issue, a dynamic deprefiguration knadmit as the Autoregressive As sorted loiter deprefiguration (ARDL) conquer be considerd and can be written as:

(8)

This equation lovenesss that extinguishedput fruit is commoditiess by esteems of explanatory waverings as well-mannered-behaved-behaved-behaved as the loiterged contingent and explanatory waverings. The frisk proof correctiond the ordinary F-proof parallel to the weighty esteem to discover the nearness of co-integrating kindred. The weighty esteem is vile on the Narayan (2005) tefficacious of weighty esteems restraint the frisks proof fact III: Unrestricted stop and no bear. If the F-proof is conspicuous than the excellent frisk weighty esteem, the theory of no-co-integration is uncommon. Belaterality this, if an F-statistic is inferior than the inferior frisk weighty esteem implies that the scantinesss of the co-integration. If the F-statistic is in incompact the inferior frisk and excellent frisk, there is no disencumbered demonstration of the scantiness or creature of co-integration kindred.

Using Wald proof to endowigate the flexure theory is,

Ho:

Ha:

The disposal restraint the theory can be sepascold to three portio, that is:

i) If the Wald F-statistic fentire aloft the excellent weighty esteem- cointegration insists.

ii) If the Wald F-statistic declines dadmit incompact the inferior frisk and excellent frisk weighty esteem- fallacious.

iii) If the Wald F-statistic declines inferiorneath the inferior frisk weighty esteem-no cointegration insists.

Furthermore, an Fault Interdependence Deprefiguration (ECM) so correction with the Frisk proof, the devise is:

(9)

Where,

: 1-L is the dissimilarity operator

: f(yt,xt)

trend: bear account

: desire confverification multiplier

Therefore, from the ARDL design, we can correction the Bewley’s (1979) retreat admission to achieve the desire confverification design.

(i=1,2,â€¦â€¦,k) (10)

Where, and , i= 1,2,â€¦â€¦, k are the separated (estimated) esteems of and , i=1,2,â€¦..,k.

However, the deficient confverification dynamic deprefiguration is considerd vile on the Unrestricted Fault Correction Deprefiguration (UECM) design.

(11)

Where ECT reproduce-exhibits as a desire confverification undeviating aim or “partial adjustment” account as inferiorneath:

(12)

And using the Wald proof to estimate the desire confverification elasticities and it ordeal fault is:

1-Sum of the contingent coefficients= Sum of the incontingent coefficients (13)

## 3.4 Basis

The succorary basis unroving consists of the year-by-year basis of the Korea rule restraint the epoch of 1976 to 2008 achieveed from World Bank basisbase, UC Atlas of Global Inequality, Interpolitical Monetary Fund (IMF), Interpolitical Financial Statistic (IFS), Korea National Statistical and Itemed Nations Conference on Commerce and Fruit (UNCTAD). Since the conclusive deproof is to perdevise retreat resolution with the basis exposed in normal logarithms, it may instead aim to effort with the log and deputy restraint variefficacious as inferiorneath:

## Tefficacious 3.4: Basis restraint deputy wavering

## Symbols

## Variable

## Proxy

y

Output fruit

Shameful domiciliary consequence (GDP)

k

Dignified fund

Shameful Urban Dignified Deviseation (GFCF)

l

Labor

Whole effort restraintce

fdi

Exotic Frequented Endowment (FDI)

Exotic Frequented Endowment (FDI) inflows

exp

Export

Whole ship-produce

exc

Genuine extransmute scold

Genuine extransmute scold

## CHAPTER 4

## REGRESSION RESULTS

## 4.0 Introduction

The resolution proof which was handled by EViews is such as Item parent proof local restraint Augmented Dickey Fuller (ADF) proof and Phillips Perron (PP) proof and Autoregressive As sorted Loiter (ARDL).

## 4.1 Item parent proof

In this con-over, couple fixed proofs on idiosyncratic stochastic bear are frequenteded, that is Augmented Dickey Fuller (ADF) and Phillip-Perron (PP) proofs which entertain been correctiond regularly I age train basis. The esteem of ADF t-statistic and PP z-statistic conquer be paralleld to the weighty esteem attached by MacKinnon (1991). The age train inferior consequence should be integrated in the common ordain precedently we can produce to cointegration resolution and operativeness proof. The issue can be loveness as inferiorneath:

## 4.1.1 Augmented Dickey Fuller (ADF) proof

Inveterebuke on the issue as inferiorneath Tefficacious 4.1.1, it loveness that issue restraint Augmented Dickey-Fuller proof statistic in Item Parent proof. This proof is character to apprehend the fixed of basis restraint wavering. In the issue, the contingent variefficacious and entire explanatory waverings are cecible on the highest and succor dissimilaritys restraint the immutefficacious with bears and immutefficacious withextinguished bears. This is consequently the p-esteem is smentire than 0.05 at cecible roll. So, we conquer uncommon Ho and argue that the basis is fixed when highest dissimilarity. Future, entire train are I(1) mode.

## Variable

## Level

## Highest Dissimilaritys

## Immutefficacious with bears

## Immutefficacious withextinguished bears

## Immutefficacious with bears

## Immutefficacious withextinguished bears

## t-stat

## p-value

## t-stat

## p-value

## t-stat

## p-value

## t-stat

## p-value

## Economic fruit (y)

-2.070027(0)

0.5421

2.327602(0)

0.9999

-5.756136*(0)

0.0003

-4.782721*(0)

0.0006

## Dignified fund (k)

-1.911924(0)

0.6251

-0.546014(0)

0.8689

-4.515321*(1)

0.0060

-4.361648*(0)

0.0017

## Effort restraintce (l)

-0.459604(0)

0.9804

-1.009485(0)

0.6241

-4.564489*(0)

0.0051

-4.425029*(0)

0.0014

## FDI (fdi)

-4.190134(1)

0.0125

-1.009485(3)

0.7363

-2.892944*(8)

0.1825

-6.300895*(2)

0.0000

## Ship-amount (exp)

2.708182(0)

1.0000

5.784347(0)

1.0000

-3.567930*(0)

0.0495

-2.184710(0)

0.2155

## Genuine extransmute scold (exc)

-2.246001(0)

0.4496

-1.594207(0)

0.4739

-5.035710*(0)

0.0016

-5.101766*(0)

0.0002

## Tefficacious 4.1.1: Issue Augmented Dickey-Fuller (ADF) proof

Criteria: Schwarz Info Criterion (SIC)

## Variable

## Level

## Highest Dissimilaritys

## Immutefficacious with bears

## Immutefficacious withextinguished bears

## Immutefficacious with bears

## Immutefficacious withextinguished bears

## t-stat

## p-value

## t-stat

## p-value

## t-stat

## p-value

## t-stat

## p-value

## Economic fruit (y)

-2.815698(18)

0.2023

3.136859(7)

1.0000

-6.399643*(11)

0.0000

-4.778071*(1)

0.0006

## Dignified fund (k)

-2.096298(2)

0.5282

-0.519748(5)

0.8745

-4.100869*(7)

0.0153

-4.204347*(7)

0.0026

## Effort restraintce (l)

-0.631981(1)

0.9699

-1.228256(1)

0.6498

-4.564489*(0)

0.0051

-4.423468*(1)

0.0014

## FDI (fdi)

-1.392163(31)

0.8440

-1.577055(31)

0.4824

-4.828185*(12)

0.0027

-5.032975*(13)

0.0003

## Ship-amount (exp)

4.407935(8)

1.0000

6.050077(5)

1.0000

-3.555909*(1)

0.0507

-2.042327(1)

0.2683

## Genuine extransmute scold (exc)

-2.374756(1)

0.3848

-1.615847(1)

0.4631

-4.981815*(3)

0.0018

-5.068019*(2)

0.0003Note: The sum in parenthesis are loiter tediousness. The proof habituate a trifling theory of a item parent. Entire train are log transformed. *Declare that 5% at cecible roll.

## Tefficacious 4.1.2: Issue Phillips-Perron (PP) proof

Criteria: Schwarz Info Criterion (SIC)

Note: The sum in parenthesis are loiter tediousness. The proof habituate a trifling theory of a item parent. Entire train are log transformed. *Declare that 5% at cecible roll.

## 4.1.2 Phillips-Perron (PP) proof

Inveterebuke on the issue as aloft Tefficacious 4.1.2, it loveness that issue restraint Phillips-Perron (PP) proof statistic in Item Parent proof. This proof is character to apprehend the fixed of basis restraint wavering. In the issue, the contingent variefficacious and entire explanatory waverings are cecible on the highest and succor dissimilaritys restraint the immutefficacious with bears and immutefficacious withextinguished bears. This is consequently the p-esteem is smentire than 0.05 at cecible roll. So, we conquer uncommon Ho and argue that the basis is fixed when highest dissimilarity from the issue of PP proof. Future, entire waverings are integrated of ordain I(1).

## 4.2 Autoregressive As sorted Loiter (ARDL) proof

The proviso of the frisk proofing is the contingent variefficacious must be in I(1) and the incontingent waverings can be kneaded in I(0) and I(1). The y is I(1) and the incontingent variefficacious is kneaded in I(0) and I(1)., the figure of co-integration can be didiosyncratic by using the Autoregressive As sorted Loiter (ARDL). The Frisk proof technique is applied to explore the desire confverification kindred incompact the extransmute scold and its determinants. The issue of the considerd ARDL deprefiguration restraint Malaysia is reputed as Tefficacious 4.2. The urbanity of match of the deprefiguration (adjusted R-squared (Adjusted-R2)) and the ordeal fault of retreat are conspicuous.

## Tefficacious 4.2 Issue ARDL deprefiguration and Cue proof

## Variable

## Coefficients

## t-statistic (p-value)

C

1.79E+09

0.047565 (0.9627)

y(-1)

-0.228855*

-3.011547 (0.0083)

k(-1)

0.488809*

3.180404 (0.0058)

l(-1)

-840.3006

-0.281681 (0.7818)

fdi(-1)

0.541542

0.774421 (0.4500)

Exp(-1)

0.112613*

2.275147 (0.0370)

Exc(-1)

43882485*

3.550907 (0.0027)

D(y(-1))

-0.155817

-1.598803 (0.1294)

D(y(-2))

0.100740

1.006186 (0.3293)

D(k)

1.023864*

5.795230 (0.0000)

D(l)

6870.563

1.329077 (0.2025)

D(fdi)

-2.088171*

-2.315364 (0.0342)

D(ex)

0.300879*

2.320793 (0.0338)

D(exc)

2859968

0.175220 (0.8631)

R-squared

0.960156

Adjusted R-squared

0.927782

Ordeal fault of retreat

3.97E+09

F-statistic

29.65876

## Cue checking:

i) Breusch-Godfrey Serial Interdependence LM proof

1.201429 (0.1111)

ii) Normality proof

0.257332(0.879268)

iii) Heteroskedasticity proof: ARCH

1.920272(0.1772)

iv) Ramsey RESET proof

0.632325(0.4389)

Note: * delineate cecible.

Inveterebuke on the tefficacious 4.2, embodys the cue proofs correctiond to constrong the nerve of the design. These sundry dignified cue proof has been propel extinguished in ordain to fix the faultlessness of the issues. The issue of the cue proof declared that the residual of the deprefiguration is normally as sorted. Belaterality this, there are no heteroskedasticitity and no serial interdependence. However, the deprefiguration successes to ignoring the Ramsey RESET proof. Since entire the likelihood is larger than 0.05 (5%) cecible roll. Thus, theory failed to repudiate the Ho, future there are scantiness of those whole in the deprefiguration carried extinguished.

## 4.3 Frisk proof

## Tefficacious 4.3: F-statistics restraint Frisk proof

Trifling Theory : No cointegration

Opinion Theory Cointegration

Model: y= f (k,l,fdi,exp,exc)

F-statistic

8.742069***

Narayan (2005)

N=33, k=5

Weighty esteem

Inferior frisk

Excellent frisk

1%

4.257

6.040

5%

3.037

4.443

10%

2.508

3.763

Note: The weighty esteems are cited from Narayan(2005).(Tefficacious fact III: Unrestricted stop and no bear;pg1988). *,**and *** delineate cecible at 10%,5% and 1% prefigurationificance roll, respectively.

Inveterebuke on the Tefficacious 4.3, the issues of frisk cointegration proof perspicuously demonstrated that the trifling theory is, aggravate the opinion theory is abundantly uncommon at 1% cecible roll. The deprefiguration lovenesss that the determinant waverings are strongly cointegrated with economic fruit in Korea. The issue lovenessed that the F-statistic estimate by Wald proof is proudly cecible at 1% prefigurationificance roll. The F-statistic is 8.742069, which is sublimeer than the excellent weighty frisk esteem of 6.040, so it is lovenessed that cointegration insists. Future, inveterebuke on the proof issue, there insist cointegration or desire confverification kindred incompact the economic fruit, dignified fund, effort, restrainteign frequented endowment, ship-amount and genuine extransmute scold.

## 4.4 Autoregressive As sorted Loiter (ARDL) proof restraint desire confverification elasticity

## Variable

## Expected prefiguration

## Coefficient

## F-statistic (p-value)

## Ordeal fault

C

## –

-3.53154

0.632016(0.4344)

4.44E+11

K

Positive

0.764333

0.229897(0.6359)

1.594101

L

Positive

25318.75

0.501133(0.4858)

35765.61

Fdi

Positive

5.627353

0.640362(0.4314)

7.032203

Exp

Positive

0.798721*

15.23019(0.0007)

0.204665

Exc

Positive

173672187.2

1.810353(0.1910)

1.29E+08

Note: * delineate cecible.

The desire confverification cointegrated deprefiguration is lovenesss as prospering:

(14)

Inveterebuke on the Tefficacious 4.4 reputed the desire confverification elasticity incompact the waverings correction the ARDL proof. The awaited prefiguration of the waverings are declare in this tefficacious and the considerd cocausative restraint dignified fund (k) is unroving 0.764333 and has consonant prefiguration with the awaited prefiguration. This implies that an extension in the dignified fund by 1 billion US Dollar (US$), the shameful domiciliary consequence (GDP) conquer extension 0.764333 billion US Dollar (US$). The ordeal fault is 1.594101 and likelihood 0.6359 is the p-esteem in the design.

Restraint the effort restraintce (l), the considerd cocausative is unroving prefiguration, it is 25318.75 and which is consonant with the awaited prefiguration. The cocausative resources that when 1 item effort restraintce extension, the GDP conquer extension 25318.75 US Dollar (US$). The likelihood is 0.4858 and ordeal fault is 35765.61.

In attention, the restrainteign frequented endowment (fdi) in considerd cocausative is unroving 5.627353 and common with the awaited prefiguration. This declare that when extension 1 billion US Dollar (US$) in the restrainteign frequented endowment, the GDP conquer extension 5.627353 billion US Dollar (US$). The p-esteem is 0.4313 and ordeal fault is 7.032203.

The considerd cocausative restraint ship-amount (exp) is unroving 0.798721, it has consonant prefiguration with the awaited prefiguration. This implies that an extension 1 billion US Dollar (US$) in ship-produce, the GDP conquer extension 0.798721 billion US Dollar (US$). The ordeal fault restraint ship-amount is 0.204665 and the likelihood is 0.0007.

In the fact of genuine extransmute scold (exc), the considerd cocausative is unroving 173672187.2 and is common with the awaited prefiguration. The coefficien