Based on the assignment given, I need to explain and giving some relevant example with definition for the following question "The maintenance of an open and liberal trading regime, sound macroeconomic management to address internal and external imbalance and longer-term adjustment policies to address supply-side rigidities enable Malaysia to achieve rapid economic growth over the past four decades, with macroeconomic stability and social progress".
Economic growth is the expansion of the nation's capability to produces the good and service to peoples want. Since the productive capacity of the economy depends basically on the quantity and quality of the resources as well as on the level of technological attainment, economic growth involves the process of expanding and improving these determinants of productive capacity.
In the year 2009, Malaysia's economic performance during the crisis was not nearly as bleak as most market. The growth returned in annual term during the fourth quarter, with real GDP up to 4.5%, and there is 1.2% contraction in the third quarter.
(Online report, 2012)
After the peaking at the 8.4% in the second quarter of 2004, the Malaysian economy has entered a moderate growth phase in line with a slowing global economy and less vigorous domestic demand expansion. Yearonyear quarterly growth slowed to 5.7% in the first quarter and 4.1% in the second quarter of 2005 from 5.8% and 6.7% in the preceding two quarters. The deceleration is less steep than feared initially and the overall economy appears set to achieve the 5.4% growth projected for the year following a strong 7.1% rise achieved in 2004.
Explanation:
For Economic Growth, one of the ways to estimate is the Gross Domestic Product (GDP) of the country. It's measured as the percent of increase in real gross domestic product.
The Malaysia economy performed remarkably well over the years due to the country's political stability. With the sound financial and economic policies adopted by the government, and the efficient management of its natural resources, brings the economic growth in Malaysia achieving within an environment of relatively low inflation.
Full Employment
Full employment defines as the level of employment when the economy is producing its potential level of output. Even in a healthy economy, there will always be some frictional and structural unemployment but there is no cyclical unemployment. Full employment does not mean zero unemployment. Together, the unemployed and employed comprise the labour force.
(Paul Crompton, Michael Swann, Sandra Hopkins & William A. McEachern, 2002)
Fact:
Rise in vacancies indicated a tightening of the labour market during the 2005, Malaysia is widely considered to be close to full employment.
(Online Report, 2005)
The Malaysia's labour market improved as the economy expanded during the 2010. The unemployment rate has dropped to 3.2% at the end of 2010, from 3.7% a year earlier which is from Ministry of Human Resources reports. It means that the total employment expanded by 1.8%, and the labour force increased by 1.3%.
Labour productivity has jumped by 2.1% to 5.8% from previous year to 2010 as it had measured by the real value added per worker, it strongly because of the productivity growth in the manufacturing by 9.5% and services in 5%.
(Online Report, 2011)
Explanation:
The Ministry of Human Resources operates the Jobs Malaysia employment portal to match jobseekers with potential employers. Many of the job positions had advertised on the site, which posted 1.8m vacancies during 2010, mostly in manufacturing which were for low-skilled occupations. For higher-skilled jobs, employers preferred to draw on the expertise and reach of private employment agencies and media. In this case it will bring up Malaysia to full employment.
(Online Report, 2011)
When the government boosts spending for the manufacturing output and three sectors alone, the impact on overall production will be modest at the best. Such as expanding economy by putting in new project to the companies and the shift in production to higher-value-added products and more sophisticated processes, this had bring to more demand for the skilled labour, which is sometimes in short supply. It will make more industrial to recruit more employee and it will increase the employment rate.
Balance Of Payment Surplus
The balance of payments is the record of a nation's international transactions, and includes both credits and debits. The debit items include all payments to other countries such as the purchases of import, the investment abroad and the interest and dividends paid abroad. The credit item includes all receipts from other countries such as the sales of export, inflows of investment into the country and earnings of interest and dividend from abroad.
(Robert J.Gordon, 2006)
Fact:
Malaysia's current-account surplus soared in the third quarter of 2006 to M$26.6bn, from M$18.9bn in the second quarter. The major source of the surplus was the trade account. The electronic and electrical sector that was accounted for 65.9% manufactured exports in the third quarter, which are the main influences on Malaysia's exports performance.
Export exceeded imports by M$23.9bn in the third quarter, which made it the second-largest trade surplus. M$25bn is a record that had been set in the 2005 first quarter. The huge trade surplus is bound to persist in the near future when the export is higher than imports in absolute terms.
(Online Report, 2005)
Explanation:
Balance of payment is the export and import of a country, financial transfers and financial capital. All the payments and liabilities will be reflect into foreign direct investment Malaysia could relied on the foreign savings support of the high gross domestic investment which would bring a rapid growth to the manufacturing exports and the surge in foreign capital, actually in foreign direct investment.
Based on the facts above, it also show that, the reflecting the positive economic of the electronic production, when then import continued at a high level, and as Malaysia's import consist of intermediate goods, and was used as parts and components in the production of exports. For example, palm oil and palm oil based products were the second largest export at the Malaysia, it will help to make a huge dent in the trade surplus
Palm oil and palm oil-based products were the second-largest export in the Malaysia will help to make a large dent in the trade surplus.
Price Stability
Price stability is one of the most important objectives of the central bank set by law. Price stability can be define as an annual rate of increase in consumer price index of less than 2% to be maintained over the medium term.
(Carson Carol S, Enoch Charles, Dziobek Claudia, 2002)
Facts:
Following a 25bps rate hike by Bank Negara Malaysia (BNM) to bring its overnight policy rate from 2.75% to 3.00% in May 2011, the central bank's monetary tightening cycle has come to an end. Although headline CPI accelerated slightly from 3.2% y-o-y in April 2011 to 3.3% in May 2011, the rate of acceleration has decreased steadily in recent months. M2 and M3 money supply growth accelerated from 8.6% and 8.2% y-o-y in March 2011 to 10.7% and 10.1% in April 2011 respectively. To a certain extent, both measures of money supply growth in April may have contributed to the central bank's decision to hike its overnight policy rate by 25bps to 3.00% in May.
Explanation:
When Malaysia used price stability, the future value of the savings and the returns on investment are preserved. The investors will have greater confidence to invest into Malaysia to undertake productive activities and for those savers the incentive to save.
Increase on investment leads in increasing the productive capacity in Malaysia and also increased economic activity will brings new job creation.
In the fact above state that, Malaysia had price stability which shows that the CPI grow slowly from 3.2% in April 2011 to 3.3% in May 2011
Conclusion
Based on this assignment, I had explained about "The maintenance of an open and liberal trading regime, sound macroeconomic management to address internal and external imbalance and longer-term adjustment policies to address supply-side rigidities enable Malaysia to achieve rapid economic growth over the past four decades, with macroeconomic stability and social progress" with the definition and some journals that had happened which enable Malaysia to achieve rapid economic growth, and also a explanation how Malaysia achieve it.
References
Books:
Peterson .W.C, Estenson .P.S., 1996, Income, Employment, and Economic Growth, 8th edition, W. W. Norton & Company, Inc.
Crompton .P, Swann .M, Hopkins .S, McEachern .W.A., 2002, Macroeconomics: a contemporary introduction, Nelson Australia Pty Limited.
Gordon .R.J, 2006, Macroeconomics, 10th edition, Pearson Education, Inc.
Websites:
http://glossary.econguru.com/economic-term/price+stability
Online Journals:
Hasan.Z, 2002, Islamic Economic Studies, vol.9, No.2.
Khee-Giap Tan & Chee-Seng Cheng, 1995, Applied Economics, Vol. 27 Issue 12.
Online Articles:
Malaysia Country Monitor, Feb2012, p3-5, 3p
Country Report. Malaysia, Dec2005, Issue 12, p31-37, 7p
Country Commerce. Malaysia, 2011, p103-122, 20p, 2 Graphs
