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For the past four decades (1961-2000), the Malaysian economy grew at an impressive average rate of 6.8% per annum. The rapid growth has been attributed, in part, to the tremendous success in the export-oriented industrialization policy. Several empirical studies on export-led growth for Malaysia have, however, led to inconclusive and mixed results. This may be due to the exclusion of domestic demand in the bivariate or multivariate models used in the studies. This study re-examines the role of domestic demand in economic growth in Malaysia. Using a three-variable cointegration analysis, the study shows that there exist short run bilateral causalities among the three variables, which implies that both the export-led growth and domestic demand-generated growth hypotheses are at least valid in the short run. On the other hand, the results are not supportive of the export-led growth hypothesis in the long run. Instead, the highly significant positive impact of domestic expenditure on economic growth implies t...

Propelled largely by direct investment via multinationals, Malaysia’s manufacturing sector has grown rapidly and is changing its output-mix. In 1992, the share of high-tech products in Malaysian manufacturing exceeded that of Japan, Korea or Taiwan. However, this ‘maturity’ was acquired without a strong research base. This article provides a framework which looks at the role of research and development (R&D) in conferring technological maturity and assesses the progress Malaysian manufacturing has made in this regard. The authors find that while multinationals have transferred many aspects of production, they have been slow in transferring R&D expertise. Neither has indigenous innovation filled this gap. Consequently, the long-term sustainability of the industrial transformation process in Malaysia is in jeopardy. The article concludes with suggestions for corrective policies.

The objective of this study is to re-investigate the export-led growth hypothesis for Asia’s Four Little Dragons using cointegration and rolling causality analyses. Employing both bivariate (exports and GDP) and trivariate (exports, GDP and exchange rate) models, the study finds that exports and GDP are cointegrated for all the four economies, implying that there is a long run relationship between the variables. However, the MWALD causality test results differ between the bivariate and trivariate models. The export-led growth hypothesis is valid only for the case of Hong Kong and Singapore in the bivariate model but valid for all four economies in the trivariate model. Furthermore, the rolling regression-based MWALD test shows that export-led growth in each of the four economies is not stable over their respective period of analysis.

Protektion und BeschAftigung in der Industrie Westmalaysias. — Die Ergebnisse dieser Untersuchung deuten darauf hin, da\ die Politik, die im Anfangsstadium der Industrialisierung die Importsubstitution gewohnlich anregt, in einem spAteren Stadium die wirtschaftliche Entwicklung behindern konnte, und zwar die Importsubstitution bei Zwischenprodukten und Investitionsgutern sowie die Steigerung der Exporte. Dieses Ergebnis ist deshalb von besonderer Bedeutung, weil nach herrschender Meinung Malaysia zu einer zweiten Runde der Importsubstitution bei Zwischenprodukten und leichten Investitionsgutern ubergehen sollte. Da die gegenwartige Politik die Form einer starker diskriminierenden Protektionsstruktur und eines Systems von steuerlichen Anreizen angenommen hat, wird die Allokation der Ressourcen verzerrt, die Produktions- und Konsumstruktur gestort, die Produktion ineffizient und das Wachstum verzogert. Um solche Wohlfahrtsverluste zu vermindern oder zu beseitigen, ist eine neue Politik zum Schutz des gewerblichen Sektors erforderlich.