A Review on Trade Performance: Influence of Distance and Muslim Population on Halal Exports

Malaysia has a very open economy and economic growth depends highly on trade. In order to stay relevant in the global supply chain to trade, the Malaysian Government has identified halal industry as a niche sector to drive growth. Although halal exports are growing steadily, the growth is still very far from the targeted growth. Thus, understanding the determinants of halal exports is important to further boost exports growth and help achieve the targeted growth. This is a concept paper to investigate the influence of distance and Muslims population to the demand of halal exports. The robustness of gravity model will be used to measure the influence of selected variables. Studies on halal economy, particularly halal export are rather scarce, thus this study will add on the body of knowledge on the halal industry. Analyzing the trend in the data, inference could be made that the shorter the distance between two trading partners, more trade will occur with an exception for Malaysia’s major trade partners. Whereas, Muslims populations do not seem to exert a strong influence on halal export demand. Further investigations need to be done to measure the influence of both variables on halal exports demand.

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