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Malaysia's Economic Evolution: A Journey Towards Diversification

Explore Malaysia's transition from a British colony to an independent nation, its economic development stages, policies, and future challenges. Learn about its diversification strategies and the impact on the economy.

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Malaysia's Economic Evolution: A Journey Towards Diversification

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  1. Malaysia

  2. History • A colony of Great Britain during 18th and 19th century • After Japanese surrender after WWII, rising movement towards independence. • Federation of Malay declared independence in 1957 • Other British territories joined the Federation and in 1963, became known as Malaysia

  3. Facts • A federal constitutional elective monarchy • Bumiputras (Muslim Malays) consist of 50.4%. Other Bumiputras consist of 11%. • Non-Bumiputra group consist mostly of Chinese and Indians. • Largest and official state religion is Islam.

  4. Economic Development • After independence, start of ISI policies. • Government planning used to first focus on export goods. • Substantial investment also made to promote middle class growth.

  5. Malaysian New Economic Policy • In response to the May 13 Incident (1969) • Social and Economic, as well as an affirmative action plan. • Plan to eradicate poverty, move indigenous groups out of agriculture. • Focus was to enrich indigenous groups while at the same time, promoting overall economic growth

  6. Export Orientated Industrialization • Focus on export economy. • Free trade zones created to promote exports. • Beneficiary of FDI, especially due to rise of Yen, Won, and Taiwanese Dollar. • During the 1970s, GDP per capita increase by 358%

  7. Continued Diversification • New Development Policy to promote diversification of Malaysian economy. • During the 2000s, continued rise in resource prices provide more investment for manufacturing.

  8. Export shift • Focus away from natural resources to other exports.

  9. Thoughts for the Future • Malaysia is continuing diversification also with resource based commodities. • Worries of dependence on few manufactured goods. • Worries of brain drain due to affirmative action policy. • Lack of strong emphasis on increasing research and development.

  10. Work Cited Drabble, John. “The Economic History of Malaysia”. EH.Net Encyclopedia, edited by Robert Whaples. July 31, 2004. URL http://eh.net/encyclopedia/economic-history-of-malaysia/ Felipe J., R. Briones, D.H. Brooks, A. Mehta and H. Verspagen (2013), `Asia’s Economic Transformation: Where to, How, and How Fast?´. Special chapter in Key Indicators for Asia and the Pacific 2013, Asian Development Bank (ADB). Aun, Lee H. "Development in Malaysia: Economics and Politics of an Idea." Akademika 64 (2004): 65-81. Jan. 2004. Web. 17 May 2015. Ministry of Education “The Development of Education. National Report of Malaysia. July 2004 http://www.ibe.unesco.org/National_Reports/ICE_2004/malaysia.pdf Athukorala, Premachandra, and Jayant Menon. "Foreign Investment and Industrialization in Malaysia: Exports, Employment and Spillovers." Asian Econ J Asian Economic Journal 10.1 (1996): 29-44. Web. 17 May 2015. The World Bank Data. Research and development expenditure (% of GDP) http://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS

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