Eroding comparative advantage
Anthony Dass | 19 Apr 2019 00:30
Malaysia’s strong export performance, especially by the manufacturing sector, has supported economic growth since the late 1980s. However, since 2000 its manufactured exports performance has been on a decline.
It was partly due to the downturn in the electrical and electronics (E&E) industry. Furthermore, manufacturing exports also face a number of challenges. Most notable is China as well as the increasingly stiff competition from the Asean peers.
At the country level, Malaysia enjoyed a comparative advantage between 1998 and 2017 vis-à-vis its peers amongst the Asean-6 countries (Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam).
However, Malaysia is losing its comparative advantage, critically to both Thailand - which surpassed Malaysia in 2015 - and Vietnam in 2017. Meanwhile, Singapore further widened its comparative advantage against Malaysia.
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