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Revisiting the productivity growth and spillovers debate: the case of Malaysian manufacturing sector

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  • Andrew Jia-Yi Kam

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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  • Andrew Jia-Yi Kam, 2014. "Revisiting the productivity growth and spillovers debate: the case of Malaysian manufacturing sector," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 19(4), pages 656-681, October.
    • Handle: RePEc:taf:rjapxx:v:19:y:2014:i:4:p:656-681
    DOI: 10.1080/13547860.2014.934529
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    1. Reunka Mahadevan, 2007. "Sustainable Growth and Economic Development," Books, Edward Elgar Publishing, number 12756.
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    1. Andrew Jia Yi Kam, 2016. "Death of linkages in host countries? A firm-level study on the channels of productivity spillovers in the Malaysian manufacturing sector," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 30(1), pages 65-79, May.

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