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Can Labour-Savings, Capital-Intensive Production Techniques Reduce Unemployment Rates in Developing Countries? Evidence from Malaysia

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  • Ranald J. Taylor

    (Murdoch University)

Abstract

Traditional economic wisdom predicts that unemployment rates will rise in most of the developing countries as a result of following an industrialisation process that utilised a labour-saving production technique. The findings of this paper suggest otherwise. Based on the development experience of Malaysia, unemployment rates were found to decline significantly when Malaysia switched from a labour intensive production technique to one that is capital intensive. The Malaysian experience suggests that initiatives put in place to encourage capital investment may lead to employment growth, thereby reducing unemployment

Suggested Citation

  • Ranald J. Taylor, 2004. "Can Labour-Savings, Capital-Intensive Production Techniques Reduce Unemployment Rates in Developing Countries? Evidence from Malaysia," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 7(4), pages 515-524, December.
    • Handle: RePEc:ozl:journl:v:7:y:2004:i:4:p:515-524
    as

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    References listed on IDEAS

    as
    1. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    2. Young, Allyn A., 1928. "Increasing Returns and Economic Progress," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 38, pages 527-542.
    3. Rowthorn, Robert, 1999. "Unemployment, Wage Bargaining and Capital-Labour Substitution," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 23(4), pages 413-425, July.
    4. Nathalie Greenan, 2003. "Organisational change, technology, employment and skills: an empirical study of French manufacturing," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 27(2), pages 287-316, March.
    5. Solow, Robert M., 2000. "Growth Theory: An Exposition," OUP Catalogue, Oxford University Press, edition 2, number 9780195109030.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Economic Growth and Aggregate Productivity: General (includes data sources); One; Two; and Multi-sector Growth Models; Technological Change; Research and Development;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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