Research on the Impact of Economic Growth: Case Study of Malaysia

Research on the Impact of Economic Growth: Case Study of Malaysia

PUBLIC EXPENDITURE POLICIES SHAPE THE ECONOMIC GROWTH IN MALAYSIA Public Expenditure/Public Spending can be defined as any expenses made by government particularly to improve certain areas and discipline. For instance, improving public goods and services, welfare and well-being of the people, government defense forces and civil servants, maintaining our economic stability, reducing inequality of income and reallocation of resources. Bose,Haque,Osborn (2003) where I do believe in their arguments that public expenditure made by the government will surely shape the economic growth of the country.

It can be seen in the policies made by Tun Razak which initiated in 1970 known as NEP or New Economic Policy that have bring the country to be one of developing country that is progressive in their economic activities. Problem statement This research will identified whether the public expenditure introduced by the government really put into action and produce outcome from it to boost our economic growth. It is important to see not only in the economic side directly but also to see at different variables that could contribute to the economic as a whole. Objectives

To see the impact from public expenditure policies towards Malaysia economic growth To identify public expenditure variables particularly education that helps in economic growth. Research Methodology This research focusing more on the secondary data which involve past research from other researchers, documents, reports made by government sectors such as Economic Transformation Program (ETP) Annual Report 2011 under Performance and Management and Delivery Unit (PEMANDU), Department of statistic. Government Intervention Government Intervention Conceptual Framework Intervening Variables

Public Expenditure Policies Public Expenditure Policies Economic Growth Economic Growth Sectorial Level: Education Sectorial Level: Education Dependent Variables Independent Variables Figure 1 Independent Variables in this research consist of two variables; Public Expenditure Policies whereby the research focusing on the Economic Transformation Program (ETP) under the New Economic Model to determine whether there is a significant effect towards the Economic Growth. While in sectorial level, the research focuses on education sector to identify the contribution towards Malaysia Economic growth.

Government intervening in this research explains the independent variable which is Public Expenditure Policies will succeed when the government intervened in the process in order to improve our economic growth. Findings. Impact from Public Expenditure Policies towards Malaysia Economic Growth It is quite difficult to see theoretical framework on how private sector can contribute to economic growth (Diamond,1989) where this research found out that Malaysia have boost their economic growth by tackling the private sector where market failure occurred.

ETP is one of the policies made by the government where government intervened in order to improve the private sector as whole where 92% outcome will produce by the private sector according to ETP Annual Report 2011. The government initiatives come into a successful result where it achieve most of the National Key Result Areas which the indicator to ensure the economic condition to be in the right track. According to Department of Statistic, Private Investments amounted to rm94 billion was the highest in five years period (between 2007 and 2011) hich surpassing the target of rm83bil. Our Gross National Income (GNI) exceed the target value of rm797 billion where it achieve rm830 billion or 104% achievement. “Most of the conclusions drawn recently regarding the growth effects of public spending are based either on the experiences of a set of developed countries or on the basis of large samples consisting of a mixture of developed and developing countries. ” Bose,Haque,Osborn (2003).

The statement were proved based on the ETP initiated by Government basically the foundation of the National Key Results Areas (NKEA) made from various research on identifying the areas that can be developed in Malaysia by looking at developed countries. In order to make sure everything succeed by boost up our economic growth, Government need to do spending whereby rm1. 4 trillion in investment to generate a GNI of rm1. 7 trillion. Public Expenditure Variables particularly Education that helps in Economic Growth.

Education sector can be related to our economic growth by seeing on the setup of education center in Malaysia. In order to boost our economic growth into its target, it is important to determine that Malaysia need to have knowledge worker that have skilled workforce for a big result fast outcome. It will help in terms of productivity and at the same time efficient production can be materialized. Under the Education NKEA, Malaysia aims to be a regional hub in the global education network with the success of the creation of [email protected] where eight world-class university and colleges with investment up to rm581. million. Apart from that, there are four discipline cluster have been developed in 2011 according to ETP Annual Report 2011 where Government focus in the areas of Hospitality and Tourism, Islamic Finance and Business, Health Sciences and Advanced Engineering, and Science and Innovation. It is important since the areas had been identified as crucial areas that need local skilled workforce or knowledge worker that will help us to reduce hiring experts from other countries. Conclusion

From the research, both objectives have positively correlation towards shaping the economic growth in Malaysia. This only can be possible by looking at how the government spend and know which one to prioritize so that it can be use efficiently. Malaysia moving forward to be a high income nation by 2020, the research found that by looking at the policies made by the government such as Government Transformation Program ensure that Malaysia is moving forward and already at the right track. Works Cited (PEMANDU), P. a. (2011).

Economic Transformation Programme Annual Reprot 2011. Kuala Lumpur: Minister in Prime Minister Department. ASCHAUER, D. A. (1989). IS PUBLIC EXPENDITURE PRODUCTIVE? *. Journal of Monetary Economics 23. Ibrahim, M. H. (2000). PUBLIC AND PRIVATE CAPITAL FORMATION . ECONOMIC GROWTH IN MALAYSIA, 1961-1995. Niloy Bose, M. E. (2003). A Disaggregated Analysis for Developing Countries. Public Expenditure and Economic Growth, 2-6. Shnatayanan Devarajan, V. S. -F. (1996). The Composition of Public Expenditure and Economic Growth. Journal of Monetary Economics 37 .