An Analysis Of The Industrial Development Potential Of Malaysia: A Shift-Share Approach

Abstract

The economy of Malaysia is diverse and the country is often referred to as a model of economic growth. As a young country, under able leadership and with a stable government, Malaysia soon established itself as a high growth economy of the world. The East Coast Economic Region (ECER) of Malaysia consisting of the provinces of Kelantan, Terengannu, Pahang and northern Johar has a different economic base and a unique industrial mix than other regions of the country. In addition to a plentiful endowment of natural resources, Malaysia has diversified its economy with a significant manufacturing component of high technology industries, medical technology and pharmaceuticals. The ECER in Peninsular Malaysia is rich in agricultural resources, rubber and fisheries. Additionally, tourism can be a rich contributor to the region’s economic growth. The objective of this paper is to develop a Shift-Share model for analyzing the unique industrial mix of the ECER and its local competitiveness potential for economic development. The results thus obtained may shed a useful light on the potential of different economic sectors, with significant policy implications towards accelerating the economic growth of the ECER.