Growth and Structural Change in the Malaysian Economy

283 Pages·1990·25.186 MB·English

by  K. S. Jomo (auth.)

GROWTH AND STRUCTURAL CHANGE
IN THE MALAY SIAN ECONOMY
Growth and
Structural Change
in the Malaysian
Economy
Jama K.S.
Professor of Human Development
University of Malaya
Palgrave Macmillan
ISBN 978-0-333-49678-7 ISBN 978-1-349-20902-6 (eBook)
DOI 10.1007/978-1-349-20902-6
© lomo K.S., 1990
Softcover reprint of the hardcover 1s t edition 1990
All rights reserved. For information, write:
Seholarly and Referenee Division,
St. Martin's Press, Ine., 175 Fifth Avenue,
New York, N.Y. 10010
First published in the Uni ted States of Ameriea in 1990
ISBN 978-0-312-04740-5
Library of Congress Cataloging-in-Publieation Data
lomo K.S. (lomo Kwame Sumdaram)
Growth and struetural change in the Malaysian eeonomy/Jomo K.S.
p. em.
Includes bibliographieal referenees.
ISBN 978-0-312-04740-5
1. Malaysia-Eeonomie eonditions. 2. Malaysia-Eeonomie poliey.
1. Title.
HC445.5.l65 1990 90-32159
338. 9595-de20 CIP
Für Nadia and Emil
Contents
List of Tables ix
Acknowledgements xii
Preface XIV
List of Abbreviations XX
1 Malaysia's Economic Heritage 1
1.1 Colonial Transformation 1
1.2 Political Background 3
1.3 Post-colonial Change 9
2 The New World Economy 15
2.1 The Post-war World Economy 15
2.2 International Trade 20
2.3 Third World Debt 25
3 Growth and the Open Economy 38
3.1 Growth 38
3.2 The Open Economy 53
3.3 Balance of Payments 66
4 Employment and Income Distribution 78
4.1 Employment 78
4.2 Labour Policy 85
4.3 Income Distribution 89
4.4 Fiscal Redistribution 95
5 Economic Planning 101
5.1 The Colonial Experience 103
5.2 The Alliance Phase 107
5.3 The NEP Phase 111
5.4 The Fifth Malaysia Plan 113
vii
viii Contents
6 Industrialisation 118
6.1 From Import-substitution to Export-orientation 118
6.2 Employment and Wages in the Manufacturing Sector 123
6.3 Heavy Industrialisation 128
6.4 The Industrial Master Plan 134
7 The New Economic Policy 143
7.1 Poverty Reduction 145
7.2 Restructuring 154
8 Fiscal and Debt Problems 166
8.1 Expenditure Trends 169
8.2 Revenue 173
8.3 Budgetary Deficits 175
8.4 The Fiscal-debt Nexus 180
8.5 Public Debt Expansion 183
8.6 Debt-servicing 191
9 Mahathir's New Policies 201
9.1 'Look East' Policy 202
9.2 Seventy-million Population Target 205
9.3 National Agricultural Policy 207
9.4 'Malaysia Incorporated' 211
9.5 Privatisation 211
9.6 Recent Labour Policies 218
10 Beyond the Malaise 221
10.1 Malaysian Experience 221
10.2 Ethnic Issues 229
10.3 Political Contradictions 233
10.4 Prospects 238
10.5 Transition? 242
Bibliography 248
Index 255
List of Tables
2.1 Growth and export indices, 1965-86 22
2.2 Composition and terms of capital flows to
developing countries in selected periods 26
2.3 Long-term debt indicators for developing countries,
1970-88 27
2.4 Impact of capital flight on debt 29
2.5 Public and publicly guaranteed debt indicators for all
developing countries, 1970-87 31
2.6 Debt-service on external debt ofThird World
countries, 1970-87 36
3.1 Gross domestic product annual growth rates,
1956-88 39
3.2 Gross domestic product by sector of origin, 1960-88
(current prices) 40
3.3 Gross domestic product by sector , 1960-88 43
3.4 Gross domestic product by sector, 1955-88 43
3.5 Gross domestic product by sector , 1960-88 44
3.6 Gross national product by expenditure category,
1956-88 47
3.7 Gross domestic product by expenditure category,
1960-88 48
3.8 Capital formation, 1970-88 49
3.9 Peninsular Malaysia: Consumer Price Index 50
3.10 Commodity exports, 1960-87 54
3.11 Exports by major groups, 1960-88 56
3.12 Value growth ofmajor exports, 1961-87 57
3.13 Output growth of major primary commodities,
1981-8 58
3.14 Production of major agricultural and mining
commodities, 1981-8 60
3.15 Net petroleum export values, 1961-88 61
3.16 Balance of payments, 1960-88 68
3.17 Gross imports by economic function, 1965-88 70
3.18 Balance-of-payments current account, 1956-88 72
3.19 Peninsular Malaysia: trading losses, 1959-88 73
3.20 Malaysia: services account net payments, 1961-88 74
4.1 Employment by sector , 1957-88 79
ix
x List of Tab/es
4.2 Labour force distribution by occupation and ethnic
group, 1957-88 82
4.3 Labour force and employment, 1970-90 84
4.4 Worker retrenchments by sector, 1983-6 86
4.5 Household income distribution, Peninsular Malaysia,
1957-79 90
4.6 Peninsular Malaysia: ratio of mean and median
incomes, 1970-84 92
5.1 Public development expenditure targets and
attainment 106
5.2 Sectoral allocations in Malaysian development plans 108
6.1 Employment in the manufacturing sector, 1947-88 123
6.2 Average wages, value added and fixed assets per
worker in the Peninsular Malaysian sector , 1963-83 124
6.3 Peninsular Malaysia: wages and salaries as a
percentage of value added, by number of employees,
1963-81 125
6.4 Peninsular Malaysia: employment and earnings in
the manufacturing sector , 1977-83 127
7.1 Peninsular Malaysia: incidence of poverty by sector ,
1970,1975 and 1980 146
7.2 Peninsular Malaysia: incidence of poverty by
rural-urban strata, 1983 and 1984 148
7.3 Ownership of share capital (at par value) of limited
companies, 1969-88 158
7.4 Allocations for poverty eradication and restructuring
of society under the 2MP (1971-5), 3MP (1976-80),
4MP (1981-5) and5MP (1986-90) 162
8.1 Federal government budget allocations, 1975-88 167
8.2 Federal government budgetary position, 1960-88 168
8.3 Public-sector expenditure as a percentage of gross
domestic product, 1971-88 170
8.4 Federalgovernmentrevenue, 1960-88 176
8.5 Consolidated public-sector finance, 1970-88 178
8.6 Consolidated public-sector deficit, 1960-88 181
8.7 List of NFPEs for monitoring 184
8.8 Composition of outstanding public debt, 1975-87
(inclusive of federal government guaranteed loans) 186
8.9 Outstanding public debt, 1970-87 188
8.10 Outstanding extern al debt, 1981-8 189
List 01 Tables xi
8.11 Malaysia's external debt compared with other
countries, 1986 190
8.12 Federal government debt-servicing, 1980-8 192
8.13 External debt-servicing, 1981-8 194
8.14 Projections for debt-service, 1975-97 196
8.15 Outstanding extern al debt: disbursements and
repayments, 1982-8 198