Revisiting the productivity growth and spillovers debate

the case of Malaysian manufacturing sector

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Malaysia, a country which aspires to be an industrialised nation by the year 2020 is now facing the dilemma of industrialisation slowdown - 'the middle-income trap'. The search for sources of economic growth in this paper drew attention to the productivity growth debate a la Krugman's 'Perspiration vs. Inspiration' discussion. The paper hypothesised that increase in productivity growth is viewed as the key for breaking free from the middle-income trap. Based on Malaysia's early experiences in hosting multinational corporations, this paper also examines the incidence of spillovers from foreign to local industries as a way to improve productivity growth. Findings suggest that increase in skill intensity and capital utilisation may allow countries to move up the value chain and move out of the middle-income trap. Finally, evidence of spillovers may imply that the industrial dualism concerns may be less profound in the later years of a country's industrialisation phase.

Original languageEnglish
Pages (from-to)656-681
Number of pages26
JournalJournal of the Asia Pacific Economy
Volume19
Issue number4
DOIs
Publication statusPublished - 2014

Fingerprint

manufacturing sector
manufacturing
productivity
income
industrialization
Malaysia
increase in productivity
multinational corporation
value chain
economic growth
incidence
utilization
industry
evidence
experience

Keywords

  • industry dualism
  • Malaysia
  • manufacturing
  • middle-income trap
  • productivity growth
  • spillovers

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development
  • Political Science and International Relations

Cite this

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abstract = "Malaysia, a country which aspires to be an industrialised nation by the year 2020 is now facing the dilemma of industrialisation slowdown - 'the middle-income trap'. The search for sources of economic growth in this paper drew attention to the productivity growth debate a la Krugman's 'Perspiration vs. Inspiration' discussion. The paper hypothesised that increase in productivity growth is viewed as the key for breaking free from the middle-income trap. Based on Malaysia's early experiences in hosting multinational corporations, this paper also examines the incidence of spillovers from foreign to local industries as a way to improve productivity growth. Findings suggest that increase in skill intensity and capital utilisation may allow countries to move up the value chain and move out of the middle-income trap. Finally, evidence of spillovers may imply that the industrial dualism concerns may be less profound in the later years of a country's industrialisation phase.",
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AB - Malaysia, a country which aspires to be an industrialised nation by the year 2020 is now facing the dilemma of industrialisation slowdown - 'the middle-income trap'. The search for sources of economic growth in this paper drew attention to the productivity growth debate a la Krugman's 'Perspiration vs. Inspiration' discussion. The paper hypothesised that increase in productivity growth is viewed as the key for breaking free from the middle-income trap. Based on Malaysia's early experiences in hosting multinational corporations, this paper also examines the incidence of spillovers from foreign to local industries as a way to improve productivity growth. Findings suggest that increase in skill intensity and capital utilisation may allow countries to move up the value chain and move out of the middle-income trap. Finally, evidence of spillovers may imply that the industrial dualism concerns may be less profound in the later years of a country's industrialisation phase.

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