Weak Interlinkages Between SMEs and Non-SMEs in Malaysia and Thailand: What Do We Know So Far?

Small and medium enterprises (SMEs) are undeniably the backbone of many developing economies, considering their sizeable share of business establishments and contribution to employment creation. Nevertheless, they have fallen short of policymakers' expectations because of the weak interlinkage issue that limits their ability to create wealth. The issue stems from SMEs' excessive reliance on non-SMEs as their primary input sources, while non-SMEs are more dependent on their cluster and imports. This paper seeks to assess the magnitude of the issue in Malaysia and Thailand by comparing the productive structures of SMEs in both economies using the cascaded input-output modelling technique. The findings validated the weak interlinkage issue in Malaysia and Thailand, with the latter suffering from it to a greater extent. Overall, SMEs remain integral to the growth drivers of developing economies. Therefore, development policies should continue to support them by considering their value-added multiplier impacts. Considering all facts and figures, strengthening existing linkage programmes and establishing an SME content requirement policy are this study's two recommendations for improving the interlinkage situation. [ABSTRACT FROM AUTHOR]