Competitiveness of Malaysian exports

Abstract

The international economy is undergoing dramatic changes, as globalisation gathers momentum, with more and more countries opening their economies and adopting export-oriented growth strategies. Malaysia is by no means a newcomer. Malaysia has always been one of the most open economies of the world with relatively low levels of tariffs and high dependence on exports. As a matter of fact, the Malaysian economy has become increasingly open over the years, with the share of exports in GNP (gross national product) rising from 48.2 per cent in 1965 to 100.3 per cent in 1996. The composition of Malaysian exports has undergone major changes with the share of manufactures growing from 29.2 per cent to 80.6 per cent during 1965-96. Noticeable changes have also taken place in the direction of Malaysia's exports, although developed country markets continue to dominate. Despite these changes, there still remains a heavy concentration of exports on a few main products and a few major destinations. Thus, in 1996, electronic and electrical (E&E) products accounted for 65.4 per cent of the country's manufactured exports, while top five countries absorbed 79.4 per cent of Malaysian exports. Malaysia owes its rapid economic growth to the rapid expansion of its exports. The fortunes of the economy are closely tied to the performance of its exports in the international market. Thus, the prospects of the Malaysian economy are intimately related to the competitiveness of its exports. An attempt is made in this paper to assess the latter with the help of new computer softwares.