Government, Innovation and Technology Policy

Government, Innovation and Technology Policy

An International Comparative Analysis

New Horizons in the Economics of Innovation series

Sunil Mani

This unique book offers a comprehensive analysis of the changing role of government with respect to domestic technology development in eight countries in both the developed and the developing world. The author distinguishes between those countries which can be classed as creators of new technologies (Japan, Korea and Israel) and those which possess the potential to create new technologies (Singapore, Malaysia, India, South Africa and Brazil).

Chapter 5: The Malaysian Experience

Sunil Mani

Subjects: economics and finance, economics of innovation, innovation and technology, economics of innovation, innovation policy

Extract

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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