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Abstract
This study attempts to re-investigate the production structure change for Malaysia economy through the ranking sectors changes over the period 1983-2000. We used four input-output tables had published so far by Department Statistics of Malaysia (DSOM) for the period under study. The study employed the Leontief model for demand side (Input inverse (I-A) -1 ) for forward linkages indices, while supply side (Output Inverse, (I-O) -1 ) for backward linkages indices to examine the ranking sectors structure changes. New evidence is found in this study: first, the integration degree between demand and supply side for the Malaysian economy still remain weak. Second, the rank correlation coefficients between forward and backward indices are not significant and very weak. Third, the linkages between the commodities sectors and the rest of the economy still remain weak. Fourth, there is still a high dependency on the primary sectors, such us Oil palm, Rubber primary products and Wood sectors. Finally, fifth, the main results of the development policies were to transform Malaysia from an exporter to an importer foodstuff and other agriculture products.
Highlights
One of the objectives all less developed countries have set themselves is rapid growth in income per head
The development process can be carried out in a number of ways, but each new industrial investment will offer opportunities for other suppliers and provide input for utilisation by other users. These backward and forward linkages are not reflected in market prices and represent externalities, which could cause the social benefits of investment to diverge from the private benefits [BULMER-THOMAS, 1982; p.190]
The data used for the construction of the indices are the input-output transaction coefficients matrices for the Malaysian economy
Summary
One of the objectives all less developed countries have set themselves is rapid growth in income per head. The development process can be carried out in a number of ways, but each new industrial investment will offer opportunities for other suppliers (backward linkages) and provide input for utilisation by other users (forward linkages). These backward and forward linkages are not reflected in market prices and represent externalities, which could cause the social benefits of investment to diverge from the private benefits [BULMER-THOMAS, 1982; p.190]. We were prepared to assume [HIRSCHMAN, 1958; p.102] common techniques across countries for each sector, a common set of relative prices and a distribution of income consistent with the eventual emergence in each less developed country of the structure of demand to be found in developed countries, we could select our key industrial sectors for promotion by reference to the backward and forward linkage found in developed countries
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