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Rationale for the Knowledge-based Economy in Malaysia. Creation of favorable legal base and special economic incentives for the innovative economy. The comparison of Malaysian case with the Russian one. Chinese business and links with overseas Chinese.


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Table of contents Table of contents List of tables and diagrams 1. Introduction 1.1 Rationale for the Knowledge-based Economy in Malaysia 1.2 Hypothesis, research objectives and research questions. Theoretical framework 1.3 Concept of the Knowledge-based Economy 1.4 The used sources and empirical literature review 2. Drivers and factors for the development of the Malaysian Knowledge-based Economy in the past 20 years 2.1 Models of factors which influence innovations 2.2 Governmental policies for the development of Knowledge-based Economy 2.3 Creation of favorable legal base and special economic incentives for the innovative economy 2.4 Education and training 2.5 Chinese business and links with overseas Chinese 2.6 Creation of good infrastructure 3. The characteristics of the Knowledge-based Economy in Malaysia 3.1 The first stages of the development of the Knowledge-based Economy. Malaysian Multimedia Super Corridor 3.2 Development of clusters in Malaysia 3.3 Building the knowledge-manpower in Malaysia 4. Current characteristics of the Malaysian economy and future challenges identification. Comparison with Russian case 4.1 The current trend in the development of Malaysian economy and future prospects 4.2 The comparison of Malaysian case with the Russian one Conclusion The list of sources and literature List of tables and diagrams Diagram №1 The interaction of different factors, encouraging implementation of innovations in Malaysia Diagram №2 GDP per capita and the share of the Chinese population in the total population of the country Diagram №3 The average monthly income of Chinese and Malay populations in Malaysia (U.S. dollars) Table №1 Selected Multimedia Super Corridor indicators (2001-2015) Diagram №4 Distribution by territories of urban GDP contribution in Malaysia Diagram №5. Gross enrollment ratio in Malaysia, % (1999, 2006-2013) Diagram №6 Number of employed persons by occupation in 2012 in Malaysia (‘000) Table №2 Research and development indicators in different countries (2002-2012) Table №3 Research and development indicators in different countries (2002-2011) 1. Introduction 1.1 Rationale for the Knowledge-based Economy in Malaysia Today Malaysia is included in the list of the Newly Industrialized countries (NICs). However, fifty years ago in the years after independence its economy was heavily dependent on agriculture and natural resources. In the 1950s and 1960s, the export of raw materials such as tin, iron ore and rubber was the main source of the country’s income. During that time, cheap and low skilled labor force as well as land and natural resources were the main factors of production. In the period after independence, most of Malaysians were badly educated and only a small group of people, which was mostly consisted from wealthy Chinese population, was able to afford secondary and tertiary education. From 1960s Malaysia began to transform its economy from agrarian into the agro-industrial and then to the industrial one. These changes led to the gradual development of industrial and financial sectors as well as infrastructure. Malaysian government created special incentives in order to establish favorable business and investment climate. The reasonable state investments, high profits from international trade, large inflows of foreign direct investment (FDI) and Malaysian cheap labor force caused the fast development of export-oriented sectors, in particular electrical and electronic sphere in the manufacturing industry. Despite the changes that occurred in the structure of the economy and a significant increase in the share of the industrial sector in GDP, till the end of 1990s, to be more precise till the Asian financial crisis in 1997-1998, Malaysian economy was continued to be heavily depended on the cheap and unqualified labor force, export of assembling production, foreign direct investment and was quite invalid in terms of national capital productivity ratio. Although the share of FDI in GDP was high, the major inflow went to the primary and secondary sectors, while the modern tertiary industries were poorly developed and were not attractive for foreign investors during that period of time. For example, in 1993 the major part, namely 66 per cent of the foreign direct investments which accounted for 7.5 per cent in GDP, went to the manufacturing sectors, mostly to those fields that need a lot of unqualified workforce, such as the dirty production and assembling, 21 per cent belonged to the extraction and processing of oil and gas products and only 13 per cent was directed to the service sector. While production in Malaysia was capital- and labor-intensive, it used also to be resource-intensive, which had a negative impact on the eco-system of the country. In that period, the government realized that Malaysia was lacking a global competitiveness and it had launched the strategy of transformation of the economy from a natural resource dependent to a productivity-driven. Moreover, now
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