National income of malaysia
national income in Malaysia
Published on: Mar 3, 2016
Transcripts - National income of malaysia
National Income of MalaysiaThe National Income accounts provide a summary of all transactions in an economy. Seenfrom the income side, the production process creates incomes for the owners of the inputsused in production including labor and capital.Every day there are many transactions taking place in the Malaysian economy. There isbuying and selling of products and services, the collection of taxes and the payment ofsubsidies, the payment to workers and the return to capital on its investment. The NationalIncome accounts provide a summary of all these transactions in an economy over a period oftime, usually a quarter or a year.Malaysia has over a period of time evolved from a low to medium income economy. Afterindependence, the economy was to a large extent dependent on primary commodities, namelyrubber and tin. During the period 1957 to 1960, agriculture was the largest sector, employingabout 58% of the labor and accounting for 47% of total output. Rubber by itself accounted forover 25% of National Income, nearly 30% of employment and about 60% of exports. At thesame period, the mining sector, dominated by tin, employed 3% of the labor force andaccounted for 25% of exports. With rubber and tin accounting for 85% of total exportsbetween them, the entirely economy was vulnerable to fluctuations in commodity prices.The Government then released the necessity to diversify the economy and reduce thedependence on rubber and tin. The Government then laid emphasis on developing othersuitable agricultural crops and embarked on downstream manufacturing activities. Thisheralded the phase of industrialization in Malaysia since the early 1970s.The Governmentprovided special assistance and incentives for setting up and for expanding industrialestablishments. The Government came up with the First Industrial Master Plan (IMP, 1986-1995), Malaysia’s first industrial blueprint.Due to the impetus given to the manufacturing sector, by 1988 for the first time, themanufacturing sector became the leading growth sector when its share of gross domesticproduct rose to 21.1% surpassing that of agriculture at 18.6%.This signaled a structural shiftfrom agriculture to a manufacturing based economy.The Second IMP (1996-2005) was introduced to bring about a change from assemblyintensive manufacturing to an integrated, industry wide approach consisting of bothmanufacturing and related services. To further boost manufacturing and modern services theThird IMP(2006-2020) was introduced in 2006.At the end of the period, Malaysia emerged asone of the most dynamic and vibrant economies of the world. Between 1971 and 2008,Malaysia was among the fastest growing countries in the Asean region.