An International Comparative Analysis
New Horizons in the Economics of Innovation series
Chapter 5: The Malaysian Experience
Malaysia is seven times bigger than Singapore (in terms of population) and has the same three ethnic groups of Malays, Chinese and Indians, which make up its total population, quite similar to that of Singapore. However, its overall economic progress is also remarkably like that of Singapore. From being an exporter of primary products, it has within a short period of ten years or so emerged as a leading exporter of high technology: in fact the country is the third largest exporter of electronic components to one of the most sophisticated markets in the world, namely that of the United States. Like Singapore, foreign companies dominate Malaysia’s enterprise sector, though the country had a much earlier policy of promoting local capital through the policy on aﬃrmative action (Bumiputera). In other words the state had a much more explicit role to play in enterprise development in the Malaysian context than in the case of Singapore. However, my analysis will show that the quality of this intervention varies signiﬁcantly across the two countries. Thus, for instance, Malaysia has a much more explicit and all-encompassing set of ﬁscal instruments for encouraging innovation in the enterprise sector but its results have been much poorer in terms of R&D investments, especially as the state has not been very eﬀective in addressing itself to the perceived shortage of technically trained personnel. This provides the broad background against which an analysis of the innovation policy of the country is attempted.1 Following the structure...
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