Question

The Malaysian economy has gone through structural transformation, explain the transformation steps of Malaysian economy from being agricultural economy to manufacturing as the engine of economic growth and to the service sector as the engine of economic growth in terms of macroeconomic variable conurbation of every sector to the Gross Demotic Product (GDP), employment generation exports and valued added.

Answer 1

The Malaysian economy is the third largest ecpnomy of South East Asia and the 35th largest economy of the world. According to the Global Competitiveness report, it is the 27th competitive economy of the world. The economy of Malaysia is greatly export oriented with a relatively low national income tax and highly affordable food and fuel costs. It also has a newly industrialised and relatively open economy.

It was from 1970's that Malaysia began the process of transformation from an economy that was heavily depwndent on agriculture and mining to an industry oriented one and further in to a service oriented economy. With increased Japanese investments, it became an industrialised economy with a consistently more than 7% GDP economy throughout the 1980's. There were many economic transformation processes and of that the Vision 2020 put forward in 1991 aomed at making Malaysia a fully industrialised economy by 2020 and a developed nation status by 2018.With the aim, the nation was able yo achieve great heights during the late 20th century.

The economic transformations of Malaysia can be rooted back to the New Economic Policy measures that were introduced in 1971. The policy aimed at increasing the economic share by 30% and eradicating poverty among the people of Malaysia. The 27 services sub sector was also liberalised in 2009. The guidelines for foreign investment comoanies were further liberalised within a few years. As of 2009, aboit 22% of the government expenditure were subsidies. It was pit an end to in 2014 whe n it decided to introduce a managed float system in petroleum pricing.

The average household income grew by almost 18% in the two year period from 2012 to 2014. From all the above policies and measures implemented till date, the share of agricultural sector in its contribution to the wconomy has been reduced to less than 8% today compared to more than 30% during 1960's. The share of the industrial sector has been increased to more than one third of the economy and the labour force. With recent developments in banking and finance along with tourism potential development, the service sector contribution has increased manifold over the years which sums up the overall growth of Malaysia.