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Innovation and Productivity in the Malaysian Food Processing Industry: An Empirical Analysis using a System Generalised Method of Moments Approach

Author

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  • Sarah Nursyazmin Mohamad Kamal
  • Normaz Wana Ismail
  • Shaufique Fahmi Ahmad Sidique

Abstract

The food processing industry was reviewed as a top priority for industrial development and targeted to lead greater growth in Malaysia’s Industrial Masterplan (NIMP). Leading to industrial development, this paper highlighted the relationship between innovative activities (R&D expenditure and ICT expenditure) and productivity with other variables like the presence of skill intensity, capital intensity, export intensity, foreign-owned firms and imported intermediate input. This hypothesis is examined for a panel dataset of the food processing industry in Malaysia from 2000 until 2015 (according to Economic Census- Manufacturing). Using a System Generalised Method of Moments (GMM) approach, empirical analysis suggests that innovators performed better than non-innovators in terms of labour productivity. Innovative activity and ICT expenditure along with skilled intensity and capital intensity seem to be the main determinants of subsector’s productivity, whereas R&D expenditure has mixed results from the estimation output.

Suggested Citation

  • Sarah Nursyazmin Mohamad Kamal & Normaz Wana Ismail & Shaufique Fahmi Ahmad Sidique, 2022. "Innovation and Productivity in the Malaysian Food Processing Industry: An Empirical Analysis using a System Generalised Method of Moments Approach," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 12(2), pages 54-61.
    • Handle: RePEc:asi:ajoerj:v:12:y:2022:i:2:p:54-61:id:4453
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