Abstract:
The phase of Malaysia economic that always has been change since an independent day,
leads the changing in economic structural. The structural changes in the Malaysia
economic can be shown based on unstable economic dependence between sectors during
the 1957-2006 periods. As a proof, from First Malaya Plan to First Malaysian Plan the
economy depends on agriculture sector. Meanwhile, in the Second Malaysia Plan to Eight
Malaysia Plan, Malaysia economy is more focused on manufacturing sector. Now, the
focus has been shifted on services sector to develop the economy which emphasize on k
economic that consists of human capital and biotechnology consumption (RMK.9). Based
on these phenomena, this research investigates the effect of structural change in the
Malaysia economic growth. Using the four most recent Malaysia input-output tables for
the year 1983, 1987, 1991 and 2000, this research also examine the relationship between
sectors by using backward and forward linkages. This research also analyzes effect of
income multiplier by using the income multiplier method. As a result, the economic
dependence from agriculture sectors to the manufacturing sectors able to generate the
economic growth. Second, the result shows that the relationship between sectors will lead
to change in final demand and will increase the economic growth. Furthermore, an
increase in output of each sector will increase the income for each sector. As a
conclusion, the empirical evidence shows that the economic structural change play a
significant role in generate the economic growth in order to achieve Malaysia as a
developed country via the Vision 2020.
