Growth Linkage between Oil and Gas and Construction Industry of Malaysia (1991-2010)

Abstract

Oil and gas sector has become very important and fundamental sector of any economy.  Oil and gas are essential and, high-value commodities for both developed and developing countries. These two products are indispensable for industry, industrial process, and industrial output. The demand for these commodities are continues to grow because of their various use and direct link to the industry and social well-being of the society.  The two characteristics high consumption and high value increases the hopes and expectations of governments, citizens, local communities, and the oil and gas companies that provide the essential services of exploration, extraction, and distribution. The construction sector play significant role to manage these activities. The objective of this study is to describe and identify the causal link and the direction of the link between the Malaysian construction industry (MCI)  and oil and gas sector (O&G) of Malaysia over the period of 1991 to 2010. The Granger causality technique is used to determine the effect of one sector to another sector. The outcome of the study is neither O&G lead to MCI nor MCI lead to O&G. The O&G and MCI are independent and there is no causality link between them during study period 1991-2010.

Keywords: Linkage, causality,