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Identifying Drivers of the Malaysian Economy Using Policy-Relevant Measures

Author

Listed:
  • M. Yusof Saari

    (Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia)

  • Chakrin Utit

    (Institute of Agricultural and Food Policy Studies, Universiti Putra Malaysia)

  • Nur Adilah Hamid

    (Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia)

  • Ibrahim Kabiru Maji

    (Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia)

  • Azman Hassan

    (Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia)

Abstract

Input-output linkages and multipliers are the two measures that are frequently used to find the drivers of an economy. Deriving from these two measures based on the traditional approach fails to consider the relative sectoral sizes. This paper introduces new linkage and multiplier measures that do not solely adjust for the relative sizes, but also extend the measures for policy-relevant indicators in Malaysia. Comparing the results between the traditional approach and the new approach, there is a clear indication that the former incorrectly identified the drivers of the Malaysian economy. The traditional approach not only introduced bias in linkages, but also overestimated the actual size of the multipliers. The new linkage and multiplier measures that were developed in this paper can be applied for other economies in finding key drivers for specific policy goals.

Suggested Citation

  • M. Yusof Saari & Chakrin Utit & Nur Adilah Hamid & Ibrahim Kabiru Maji & Azman Hassan, 2017. "Identifying Drivers of the Malaysian Economy Using Policy-Relevant Measures," Malaysian Journal of Economic Studies, Faculty of Business and Economics, University of Malaya & Malaysian Economic Association, vol. 54(1), pages 23-40, June.
    • Handle: RePEc:mjr:journl:v:54:y:2017:i:1:p:23-40
    DOI: 10.22452/MJES.vol54no1.2
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    More about this item

    Keywords

    Backward linkages; forward linkages; input-output; multipliers; value added;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy

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