Effects of Trade Policies on the Structure and Growth of Manufacturing Industries in Peninsular Malaysia: 1960-1980

Abstract

The paper attempts to assess the effectiveness of Peninsular Malaysia commercial and industrial promotion policies on the structure and growth of the different industrial sectors. A general equilibrium model is used, which takes into account the interactions between the importable, exportable and home goods market. The ¡°net protective rate¡± shows the net result of all the policies implemented and the effects of exogenous factors. Results show that exports of manufactures have been encouraged by changes in income. The incentive components due to domestic policies and exogenous factors have fluctuated between positive and negative values. The net protective effects of domestic policies have tended to be higher for the years since 1974. The actual net protective rates of manufacturers have been negative for the years 1968, 1971, 1973, 1975, 1978 and 1979. Except for 1973, the negative effects have been mainly due to exogenous factors. In the case of imports of manufactures, the protective effect due to changes in income has been positive for all years from 1967 to 1980. The actual net protective effect has been mainly negative for the years since 1976. This has been mostly due to exogenous factors. In the case of SITC 6 and 8, domestic policies have also contributed to this negative effect.