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Input-Output Approach to Assess the Economic Effects of Final Demand for the Machinery and Equipment Industry

Author

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  • Nuur Rasyiqah Zainuddin

    (Faculty of Business and Economics, Universiti Malaya, 50603, Kuala Lumpur, Malaysia Author-2-Name: Chen Chen Yong Author-2-Workplace-Name: Faculty of Business and Economics, Universiti Malaya, 50603, Kuala Lumpur, Malaysia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract

" Objective - This study aims to identify Malaysia's machinery and equipment (M&E) industry local supply chain, classify its key industries, and estimate the economic effects of changes in final demand within the industry. Methodology - This study employs a quantitative input–output analysis to assess both the strength and distance of linkages between the machinery and equipment (M&E) industry and other sectors in Malaysia. Industries are classified according to normalized backward and forward linkages, and multiplier analyses are used to evaluate the economic effects of changes in final demand for the M&E industry. Findings - Results indicate that the M&E industry in Malaysia is primarily a backward linkage-oriented sector, stimulating growth in upstream industries through its demand for inputs. The analysis further identifies five key industries, including M&E, within its supply chain. Scenario-based multiplier simulations reveal negative economic impacts from reduced export demand for the M&E industry, but positive impacts from investment in the M&E sector and its related industries. The results also indicate the M&E industry's reliance on external demand. Novelty - This study demonstrates the value of systems thinking by integrating scenario analysis with supply-chain linkages, industrial classifications, and multiplier effects to produce a more comprehensive economic assessment. The approach highlights potential policy insights for improving public resource allocation in Malaysia. Type of Paper - Empirical"

Suggested Citation

  • Nuur Rasyiqah Zainuddin, 2025. "Input-Output Approach to Assess the Economic Effects of Final Demand for the Machinery and Equipment Industry," GATR Journals jber262, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:jber262
    DOI: https://doi.org/10.35609/jber.2025.10.2(5)
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    References listed on IDEAS

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    1. repec:eme:mfppss:eb018566 is not listed on IDEAS
    2. Kim Tae-Jin & Tromp Nikolas, 2022. "The Economic Impact of the Logistics Industry in South Korea: Based on an Input-Output Approach," LOGI – Scientific Journal on Transport and Logistics, Sciendo, vol. 13(1), pages 174-185, January.
    3. Erik Dietzenbacher & Isidoro Romero, 2007. "Production Chains in an Interregional Framework: Identification by Means of Average Propagation Lengths," International Regional Science Review, , vol. 30(4), pages 362-383, October.
    4. Mitsuyo Ando & Fukunari Kimura & Ayako Obashi, 2021. "International Production Networks Are Overcoming COVID-19 Shocks: Evidence from Japan's Machinery Trade," Asian Economic Papers, MIT Press, vol. 20(3), pages 40-72, Fall.
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    Keywords

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    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
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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