Factor Shares, Productivity, and Sustainability of Growth in the Malaysian Agricultural Sector

By Othman, Jamal; Jusoh, Mansor | Journal of Southeast Asian Economies, December 2001 | Go to article overview

Factor Shares, Productivity, and Sustainability of Growth in the Malaysian Agricultural Sector


Othman, Jamal, Jusoh, Mansor, Journal of Southeast Asian Economies


Introduction

Objectives

The purpose of this study is to conduct a topological examination of the structure of the Malaysian agricultural production function over a thirty-seven-year period (1960-96). In particular, this study analyses how the shares of factor growth and total factor productivity to agricultural growth change over time, using the Cooley-Prescott (C-P) time-varying parameter (TVP) model. The relative magnitudes of the permanent and temporary portions of the TVP vectors, and changes in factor shares and input elasticities for Malaysian agriculture are also examined over time. This C-P TVP model is chosen based on its strength in examining structural "drift", as opposed to uniformly constrained shifts captured by ordinary regression models. This article first reviews the role of Malaysia's agricultural sector in relation to the economy. Subsequent sections present the C-P technique to address the issue of sources of growth and total factor productivity in the sector over time. Discussion of the results and policy implications then follow.

Overview of Malaysian Agriculture Economy (1960-96)

The Malaysian economy has undergone a marked change from a simple farm-based agricultural economy to some heavy industry. The share of agriculture (including forestry and fisheries) as a percentage of the gross domestic product (GDP) declined from 29 per cent in 1970 to 13 per cent in 1996. The share of the manufacturing sector, however, leapt more than twofold, from 14 per cent in 1970 to 35 per cent in 1996. A structural shift in employment has also been evident, with agricultural employment declining from 53 per cent in 1970 to 16 per cent in 1996. All other subsectors experienced increases in the share of employment. The manufacturing sector witnessed the largest percentage increase, from 8.7 per cent in 1970 to 30 per cent in 1996.

Another shift is observed in the composition of export value. Manufacturing exports increased tremendously, from 12 per cent in 1970 to 82 per cent in 1996. The exports of major agricultural commodities comprising of rubber, timber, and palm oil declined from 55 per cent in 1970 to only 9 per cent in 1996. The exports of tin also declined, from 20 per cent to 0.3 per cent in the same period, whilst the export of gas and oil increased rapidly from 1970 to 1980, but thereafter declined to 5 per cent in 1996.

The real values of agricultural production in absolute terms grew remarkably, by more than sixfold in 1996 relative to 1960 (Figure 1). Overall, agricultural production in real terms grew by 4.64 per cent annually (albeit at a decreasing rate) in the 1960-96 period (Table 1). Its share of the GDP declined considerably but at a much lesser pace compared to its growth in absolute terms. In 1987, for the first time in the nation's history, Malaysia's manufacturing sector overtook agriculture in terms of GDP share.

[FIGURE 1 OMITTED]

Between 1960 and 1996, agricultural land-use increased by 2.24 per cent annually. This growth was largely due to the expansion of oil palm. However, overall land-use declined sharply in the 1990s (Table 1). The annual growth rate for the period was 0.62 per cent, as opposed to a high 2 per cent in the preceding decades. Recent government policies on halting the opening of new forest lands for land development schemes (except for the East Malaysian states of Sabah and Sarawak), and concentrating on in situ development, suggest that Peninsular Malaysia may have reached the end of the road in terms of forest conversion for aggregate agricultural development (Jamal and Chamhuri 1998).

Malaysia's two major agricultural crops -- oil palm and rubber -- consistently constituted about 70 per cent of the country's total agricultural land area. Rubber-planted areas grew exponentially up to 1965, tapered off until 1982, and declined steadily thereafter. On the other hand, oil palm land-use steadily increased throughout the same period. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Factor Shares, Productivity, and Sustainability of Growth in the Malaysian Agricultural Sector
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.