Tiger Economies Under Threat: A Comparative Analysis of Malaysia's Industrial Prospects and Policy Options
In recent years, growth rates in the so-called 'Tiger economies' of Southeast Asia have been above the average not only for developing countries but for the world as a whole. Yet they fall short of the economic growth experienced during 1975–95. The underlying worry for policy makers is that the decrease presages the beginning of a downward trend, a worry that has been sharpened by the global recession. But are the Tiger economies under threat? And if so, what are the causes and how can they...
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Southeast Asian tiger economies feel threatened by competition from other countries and worry that their growth momentum might be flagging. Even though their growth rates are above the average for the world and for developing countries, they fall short of yesterday's economic performance. The underlying worry is that they presage the beginning of a downward trend, the harbingers of which are lower rates of investment, persistently low rates of total factor productivity and low levels of innovativeness. The South East Asian tigers' worries motivate three questions: First, are the tigers rightly threatened by a creeping economic sclerosis or what some observers are calling the "middle income trap"? Second, if the threat is real, what are the underlying causes? Third, are there ways of neutralizing the problems and at least maintaining if not raising the growth rates of the recent past? This book tackles these questions by means of a comparative analysis of the Southeast Asian tiger economies, centered on Malaysia. This analysis draws upon a comprehensive set of techniques and indicators to assess competitive pressures, gauge industrial and technological capabilities and to indicate the directions of industrial change in Southeast Asia could take.
Acknowledgments xvAbout the Authors xviiAbbreviations xixChapter 1 Southeast Asia Faces Mounting Competition 1Brief Development History of the Four Southeast Asian Tigers 4The East Asian Model 5The Malaysian Experience 7Analyzing Industrial Change in Southeast Asia 14Tiger in the Spotlight 15Chapter 2 Malaysia: The Quintessential Maturing Tiger Economy 17Sources of Growth 17Evolution of the Manufacturing Industry in Malaysia 22Annex 2.A: Indicators of Competitiveness 31Chapter 3 Analyzing Comparative Advantage and Industrial Change: Reading the Export Trade Tea Leaves 37Exports and Industrial Change 38An Overview of Export Capabilities 86Chapter 4 Imports and Foreign Direct Investment: Competition and Technology Transfer 93Imports and Technology Transfer 95Patterns of Foreign Direct Investment 98Technology Infusion from FDI and Upgrading 102Chapter 5 Leading and Faltering Industries: The Electronics, Auto Parts, and Agro-Processing Sectors 105Electronics and Electrical Engineering 105Auto Parts Industry 109Palm Oil, Biodiesel, and Food Products 113Chapter 6 Can Southeast Asian Tiger Economies Become Innovative? 119Industrial Location 119Quality of Labor 131Access to Finance 150Chapter 7 From Technology Development to Innovation Capability 159R&D Spending 160Patenting Activity 172Licensing and Technology Transfer 178Research Activities of Malaysian Firms 180Innovation Comparative Advantage 183Chapter 8 Can the Tigers Grow Fast and Furious Again? 187Long-Run Growth 187How Neighboring Economies Can Affect Malaysia 199Chapter 9 What Can the Tigers Do?203Appendix A Revealed Comparative Advantage of East Asian Economies Other than Malaysia 219Appendix B Product Space Analysis for Southeast Asian Economies 225Appendix C Research and Development Spending by Private Firms in Malaysia 235Appendix D Index of Innovation Revealed Comparative Advantage 237Appendix E Financial Incentives for Research and Development, Technology Development, and Innovation in Chinese Firms 241Appendix F Financial Incentives for Research and Development, Technology Development, and Innovation in Thai Firms 243References 249Index 269Figures2.1 Industrial Composition by Type of Manufacture, Malaysia, 1981, 1990, and 2002 232.2 Value-Added Ratios in Machinery in Selected East Asian Economies 27
