Higher Education and Socioeconomic Development in Malaysia:
A Human Resource Development Perspective

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II. Socioeconomic Development

Impetus to Development

1. How would one describe, in a nutshell, Malaysia's socioeconomic development?
2. What were the major factors that led to the rapid socioeconomic development in Malaysia?

Before we attempt to answer the first question, we want to define socioeconomic development of a country simply as social and economic transformations, planned or otherwise, that tend to increase social welfare or well being, material or spiritual, enjoyed by the citizens of that country. In Malaysia, such development was, in a nutshell, intricately tied with the development (or exploitation!) of Malaysia's abundant natural resources, namely, mineral deposits of tin and later petroleum, its endowment of soil and climate that support plantation agriculture (rubber, oil palm, cocoa, pepper etc.) and rain-forests that bear tropical hardwoods. It was the exports from these three industries that served as the triple-engine of Malaysia's economic growth in the early days of the country's independence from Britain. Economists term this phenomenon as an export-led growth.

Economic Growth and Structural Change

From the early days of independence up to the 5MP (1986-90) period, the government's development priority continued to focus on the rural areas. It adopted this stance because the vast majority of the people were rural dwellers, and they were the ultimate source of political power of the ruling party. At the time of independence (1957), only 27% of the population of Peninsular Malaysia (total population of 6.3 million) could be termed urban (Yahaya Ibrahim, 1995). In 1997, the estimated population of Malaysia was 22.18 million, of which 79% resided in Peninsular Malaysia. The urban to rural population ratio has changed dramatically to about 51:49, indicating an urban majority. With rapid urbanization, social amenities (schools, hospitals, electricity and piped water, etc) became more accessible to a wider section of the population. Social conditions improved. For example, literacy rate increased, as did many other socioeconomic indicators, such as life expectancy⁹, doctor to population ratio, etc.

Throughout the post-independence period, the structure of the Malaysian economy continued to change steadily from a predominantly commodity-based to one that is industrial-based. The economy remained export-oriented, except that composition of exports has changed. To understand this structural change, we note that in 1960, about 44% of Malaysia's GDP originated from primary industries (agriculture, forestry, fishery and mining), and only about 12% came from secondary industry, i.e. manufacturing (Jomo, 1990), the remaining 44% being contributed by the service sector (largely government). Ten years later (1970), the primary sector's contribution dropped to 37% and manufacturing's share climbed to 17%. By 1980, the primary sector shrank to only a third of the GDP, while the secondary sectors grew to 25%. Meanwhile, agriculture's contribution shrank further to only 19% in 1990, whereas manufacturing's share rose to 27%. In 1997, just before the economic crisis, agriculture's share of the GDP dwindled further to only 12%, while manufacturing claimed a hefty 35% (Economic Report 1997/98)

 

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