Global Value Chains and Premature Deindustrialisation in Malaysia

Malaysia has experienced premature deindustrialisation since the early 1990s. The decline in the relative contribution of manufacturing to the economy has been underpinned by structural changes in the electronic, electrical, and machinery industries. There is evidence of a decline in the country’s backward global value chain (GVC) participation in the manufacturing sector. Although its position in GVCs has been upgraded, the country’s attractiveness as an outsourcing base has weakened. The contribution of foreign value-added in the manufacturing sector’s export growth has also declined. Micro-level evidence points to weaknesses in terms of human capital and technology.

Global Value Chains and Premature Deindustrialisation in Malaysia