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Malaysia’s Manufacturing Goods and Comparative Advantage Case Study

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Updated: Feb 27th, 2021

The trade performance of Malaysia’s manufacturing good can be determined by its comparative advantage. Comparative advantage measures the cost of producing a particular product in country X against the similar product in country Y. Economists analyze the ratio of two trading countries as an indicator of its trade performance (Bowen & Pelzman 2008). Hence, Malaysia can have a comparative advantage when it produces fewer goods.

According to trade analysts, comparative advantage measures a country living standard and revenue (Gangnes 2010). The factors that influence the comparative advantage of Malaysia’s manufacturing goods includes abundant resources, efficient communication, technology, low-cost of manufacturing goods and the pattern of demand (Bowen & Pelzman 2008). The presence of raw materials such as timber influences the production of cheap furniture for export.

Communication is an important factor of production. Malaysia’s cheap labour influences the cost of production. Thus, the comparative advantage of a country can be affected by the factors mentioned above. Malaysia has abundant timber; hence the cost of producing wood products is low compared to China and Japan. Malaysia’s industrial policies remain open while maintaining the 21st position on the world export table (Wen 2005).

The growth of its manufacturing goods remains steady because of its abundant resources and low-cost production. The revealed comparative advantage of Malaysia’s manufacturing goods exceeds Singapore, Thailand, Indonesia and the Philippines (Viilman 2009). The increase in the production of E&E accounts for the increase in the economy. The steady growth of Malaysia’s Exports is influenced by its international presences and trade performance. Malaysia export performance of E&E products increased by 104%. Malaysia’s export value grew by 37.5%. The result indicates Malaysia’s trade performance against the US, China and Singapore. Malaysia’s E&E trade performance surpassed Thailand, Singapore and the US (Shapira 2011).

References

Bowen, H & Pelzman, J 2008, US export competitiveness, McMillian Press, New York.

Gangnes, B 2010, Global production networks in electronics ad intra- Asian trade, Hawaii, Manoa, Economic Review, China.

Shapira, P 2011, Knowledge economy measurement: methods and insights from the Malaysian knowledge content study, Asia Fellows Program 2010-2011, China.

Viilman, N 2009, Market share analysis of Malaysian exports: implication on its competitiveness, Review of Economics and Statistics, China.

Wen, C 2005, Export competition between Thailand/Malaysia and China in the US market: survey on electrical and electronic product. Asia Fellows Program 2000-2001, China.

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IvyPanda. "Malaysia’s Manufacturing Goods and Comparative Advantage." February 27, 2021. https://ivypanda.com/essays/malaysias-manufacturing-goods-and-comparative-advantage/.

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IvyPanda. 2021. "Malaysia’s Manufacturing Goods and Comparative Advantage." February 27, 2021. https://ivypanda.com/essays/malaysias-manufacturing-goods-and-comparative-advantage/.

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IvyPanda. (2021) 'Malaysia’s Manufacturing Goods and Comparative Advantage'. 27 February.

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