Academy of Strategic Management Journal (Print ISSN: 1544-1458; Online ISSN: 1939-6104)

Abstract

Factors Affecting the Malaysian Natural Rubber Production and Consumption

Author(s): Yasir Mubarak Bashier, Elsadig Musa Ahmed, Khalid Eltayeb Elfaki, Seetahaletechmy Thambah, Aye Aye Khin

This study examined the supply and demand of natural rubber in Malaysia, intending to identify the factors that shaped the Malaysian rubber industry production and consumption. Two models were estimated the supply and demand of natural rubber, mainly using the autoregressive distributed lag (ARDL) model cointegration approach over the period 1980-2019. The cointegration results confirmed the existence of the long run cointegration relationship in both supply and demand model. In the long run, the empirical results indicate a negative relationship between natural rubber prices (SMR20), exchange rate, and total natural rubber supply (TPNR), while the crude oil price influenced natural rubber supply positively. On the other side, the relationship between natural rubber prices (SMR20), the total stock of natural rubber in the world, and natural rubber demand (TCNR) found to be positive. The crude oil price found to have an insignificant relationship with natural rubber consumption in the long run. The models provide a valuable framework for analysing the effect of changes in major variables such as price, the total stock of natural rubber, exchange rate, and crude oil price on the supply and demand of natural rubber.

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