UNESCO SCIENCE REPORT

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UNESCO SCIENCE REPORT Accountability and effective monitoring [of innovation] is a must to ensure that investment yields a desirable rate of return. Rajah Rasiah and V.G.R. Chandran Dr Kastoori Karupanan demonstrates the Digital Autopsy at a mortuary in Kuala Lumpur Hospital. This forensic application creates a three-dimensional image that enables a virtual body to be viewed and dissected in high definition. Photo: © Bazuki Muhammad/Reuters 676
26 . Malaysia Rajah Rasiah and V.G.R. Chandran INTRODUCTION Stable economic growth but challenges lie ahead The Malaysian economy grew by 4.1% per year on average between 2002 and 2013, pausing only briefly in 2009 at the height of the global financial crisis (Figure 26.1). The rapid return to positive growth in 2010 can be at least partly attributed to the two stimulus packages adopted by the government in November 2008 and March 2009. Malaysia was an early convert to globalization. Since the launch of export-oriented industrialization in 1971, multinational corporations have relocated to Malaysia, fuelling a rapid expansion in manufactured exports that has helped turn the country into one of the world’s leading exporters of electrical and electronics goods. In 2013 alone, Malaysia accounted for 6.6% of world exports of integrated circuits and other electronic components (WTO, 2014). Rapid growth and the consequential tightening of the labour market led the Malaysian government to focus from the 1990s onwards on a shift from a labour-intensive economy to an innovation-intensive one. This goal is encapsulated in The Way Forward (1991), which fixes a target of achieving high-income status by 2020. Whereas Malaysia has done remarkably well over the past two years in terms Malaysia of structural reform, several areas still require attention if the country is to achieve its goal. We shall now examine these areas one by one. The rapid expansion of exports in electronics from the 1970s onwards has turned Malaysia into a major hub for the production of high-tech goods. Today, Malaysia is highly integrated in global trade, with manufacturing contributing over 60% of its exports. Half of these exports (49%) were destined for the East Asian market 1 in 2010, compared to just 29% in 1980. Over the past 15 years or so, the share of manufacturing in GDP has gradually declined as a natural consequence of the concomitant growth in services as a corollary of greater development. Modern manufacturing and services are deeply intertwined, as high-tech industries often have a massive services component. The development of the services sector is thus not, in itself, a cause for concern. More worrying is the fact that the shift towards services has neglected the development of high-tech services. Moreover, although the volume of manufacturing has not declined, less value is being added to manufactured goods than before. As a consequence, Malaysia’s trade surplus declined from 1. essentially China, Indonesia, Republic of Korea, the Philippines, Singapore, and Thailand Figure 26.1: GDP growth in Malaysia, 2002–2014 (%) 8 7.43 7 6 5 4 5.39 5.79 6.78 5.33 5.58 6.30 4.83 5.19 5.64 4.73 6.00 3 2 1 0 Chapter 26 -1 -2 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -1.51 Source: World Bank’s World Development Indicators, June 2015 677
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UNESCO SCIENCE REPORT Towards 2030
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Published in 2015 by the United Nat
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Report team Director of the Publica
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Foreword Irina Bokova, Director-Gen
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