Output, Income and Employment Multipliers in Malaysian Economy: Input-Output Approach

Abstract

This study attempts to investigate the success or failure development policies for Malaysia economy through the multipliers indices over the period 1983-2000. We used four input-output tables had published so far by Department Statistics of Malaysia (DSOM) for the period under study. The study employed the Leontief inverse model that is open with respect to household for simple multipliers of the output, income and employment; type I multipliers of the income and employment. While it used Leontief inverse model that is closed with respect to household for total multipliers of the output, income and employment; type II multipliers of the income and employment. New evidence is found in this study: first, there is still a high dependency on the primary sectors, such us Oil palm, Rubber primary products and Wood sectors. Second, output and income multipliers for Agriculture sector are still very weak even where some success has resulted from planning policies. Third, the main result of the investment policy was to transform Malaysia from a country of surplus labour to one with a shortage. Fourth, there is no consideration of efficiency or comparative cost in the selection of ‘key’ sectors by reference to multiplier indices.