Investigating source change of economic development in Malaysia: Total input cost approach

Abstract

The paper examines compositional structure changes in the Malaysian economy, over 1980-2015, when nine plans were implemented and five I-O tables were published by Department of Statistics Malaysia. Input side is utilised to evaluate changes in economic efficiency. The study focuses on changes in economic structure with different levels of development over time. As results indicate, the source of economic development in the Malaysian economy is final demand for 1983-1987, 1991-2000, 2000-2005 and 2005-2010 periods and for the whole period of the study. A rise in efficiency over time for the 1983-1987, 1987-1991 and 1991-2000 periods was revealed. Furthermore, the efficiency degree between the above sub periods increased over time but remains weak over the study period. There is also vital change in value added structure in recent years. The economy has not moved fast enough forward, and is not geared by the type of exports that sustains a dynamic industrial development. Overall, there is need of implementation of various effective policies regarding R&D, innovation and human capital to meet future challenges. © 2017 Inderscience Enterprises Ltd.