Economic Development of Malaysia since 1980Economic Development of Malaysia since 1980The economic development of a given economy or country is closed anchored on socio-cultural, historical and economic values of a particular nation. The Malaysian economy is a resource-rich country with the strong traditional economy that results from its commodities. The country is central in rubber and tin and produces more than half of the global palm oil. Further, the country is a net exporter of gas and oil. As estimated in January 2013, the proven reserves of oil were to be 3.7 billion oil barrels alongside 1.3 trillion cubic meters gas by volume.
During the 1980s and 1990s, there were several alterations in the character of the economy radically. The economy developed into a predominantly manufacturing economy that with an intense focus on export-oriented electronic and electrical equipment. The period saw a major economic contribution by the manufacturing sector at 24.2% of the Gross Domestic Product in 2012. In addition, cars and a wide range of commodities for the domestic market also are key drivers to the economic development of Malaysia.
The growth in the manufacturing output has been remarkable as it grew by more than nine percent per year during the two decades 1980 to 2000. Also, the manufacturing sector output has grown by 3.4 percent per year between 2000 and 2010. Further, there has be unmistaken growth in the service sector in these decades that have been on a rapid momentum. The long-term economic plan in Malaysia is to transform the manufacturing industry from the assembly of import component to a design, as well as the production of original commodities.
The motivation for this transformation of the manufacturing sector is the need to attain industrialized economy status by 2020. The economic planners of Malaysia have earmarked such strategies as advanced materials, biotechnology, energy technology, microelectronics, Information Technology as well as automated manufacturing as the key sectors that will drive this goal. The Gross National Income of Malaysia by 2012 was US$287.0 billion whereas the Gross National Income Per Capita was US$ 9820. Further, the Gross Domestic Product growth was 4.3% per annum between 2008-2012 while the inflation grew by 2.5% per year between 2008 and 2012.
The economy went into a brief recession in the mid-1980s. However, the economic growth followed strongly until 1997 when the collapse of some Southeast Asian financial markets caught the Malaysian economy in the fall. Such a crisis caused great interruption to the rapid growth of the Malaysian economy and subsequently throwing the economy into a fierce recession. Thus, this interruption shrunk the economy by 7.4 percent in 1998. Further, the demand for the economy’s exports greatly collapsed particularly that of Japan for semiconductors.
The country was forced to postpone many projects as many companies experienced challenges. In addition, the rate of unemployment shot high at a faster rate. The government in 1998 took measures to stimulate the economic growth and development. The measures instigated the growth of the economy in the second quarter of 1999 and by 2000, the Malaysia had once again became very strong spearheaded by the manufacturing sector. Particularly, exports of electrical and electronic commodities soared with a sharp rise in interest in foreign investment. Nonetheless, in 2001, the Malaysian economy stalled once more as demand for the exports slowed.
However, this picked-up again with the increasing international and commodity prices in 2002. There was a subsequent firm growth of more than 5% per annum that continued during the period between 2003 and 2007. However, during the world’s economic downturn as well as the fall in global demand of 2008 to 2009 also affected the economy slowing it down in 2008. This led to the economy to contract by 1.5% in 2009. However, the economy further revamped strongly in 2010 as it grew by 7.4% spreading at four to six percent per annum in the period between 2011 and 2014.