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TOPIC 1: INTRO TO ECO. DEVELOPMENT - Coggle Diagram
TOPIC 1: INTRO TO ECO. DEVELOPMENT
MALAYSIAN HISTORY
strategic geography
sea-lane position brought trade and foreign influences that fundamentally influenced its history.
Portuguese
were the first
European colonial
powers to establish themselves in Malaysia, capturing Malacca in 1511, followed by the Dutch.
The Anglo-Dutch Treaty
of 1824 defined the boundaries between British Malaya and the Netherlands East Indies (which became Indonesia). A fourth phase of foreign influence was immigration of Chinese and Indian workers to meet the needs of the colonial economycreated by the British in the Malay Peninsula and Borneo.
Japanese
invasion during World War II ended British
domination in Malaysia
A tough military response was needed to end the insurgency and bring about the establishment of an independent, multi-racial Federation of Malaya in 1957.
WHAT IS ECONOMIC GROWTH?
:
Sources of Economic Growth
2. Technological Advancements and Innovation
New technologies improve productivity and efficiency across industries, leading to growth. They create new products, increase production capacity, and lower costs1.
4. High rate of social, polical and ideological
transformation
Social Transformation:
Changes in demographics, education, and social norms can affect economic growth. For instance, an increase in the working-age population can lead to higher productivity, while shifts in consumer preferences can influence demand for goods and services.
Political Transformation:
Stable political environments are conducive to economic growth. Political stability encourages investment, trade, and long-term planning. Conversely, political instability, corruption, or frequent policy changes can hinder growth.
Ideological Transformation
: Ideological shifts impact economic policies. For example, a move toward free-market capitalism or socialist policies can shape regulations, taxation, and incentives for businesses and individuals.
3. Investment in Capital:
Building infrastructure, acquiring equipment, and investing in physical assets boost production capacity and efficiency.
1. Productivity
Better training, equipment, and management techniques enhance productivity, allowing more goods and services to be produced in less time.
Definition: the
increase
of
per capita grossdomestic product
(GDP) or other measures of aggregate income, typically reported as the a
nnual rate of change in real GDP
WHAT IS ECONOMIC DEVELOPMENT
Definition:
the increase in the standard of living of a nation's population
with
sustained growth from a simple, low-income economy to a modern, high-income economy.
Sources
of Contributing to
Rapid Economic
Development of Malaysia..
1. Labor force:
Its labor force is not only large for its population but young and educated. Much of its skilled managerial labor force was trained in countries such as the US, UK and Japan. The effect is productivity will increase
2. Techno transfer:
The introduction of latest technology can bring country faster development.
3. Capital:
Usually, a developed country has a big capital such as capital in human, land, resource and income.
4. Natural resource:
The availability of natural resource such as palm oil, timber, petroleum and natural gas. Natural resource can promote economic growth
5. Educational:
The increasing educational institutions and increasing educational system in Malaysia can produce more workers in higher qualification such as degree, master and PhD holder.
6. Political:
The overall stability of its political environment. Despite its multi ethnic and multi society, Malaysia is one of the few countries that has experience changes in leadership without loss of continuity in government policies.
GROWTH & DEVELOPMENT IN ISLAMIC PERSPECTIVE
Differences
Capital Sources
Conventional:
Material and riba (interest) is a must, gharar and uncertainty income.
Islamic:
derived from internal (zakat, EPF) and external (borrowing from another muslim country.
Concept/ Objective
Conventional:
material based ie GDP, per capita income, saving, investment, infrastructure and development project
Islamic:
ultimate objective economic development is not merely material welfare in this world but extendes to hereafter (falah).
Sources from
Islamic Perpectives
3. Entrepreneurship
Most economist agree that entrepreneurship is the key economic growth.
Entrepreneurship is the creative ability of individual to seek profit by combining resources to produce innovative product.
2. Human Resource
An efficient labor force is important for economic growth.
From the Islamic perspective, efficiency requires both professional and moral quality so as to get the maximum contribution from the labor force.
Meanwhile the conventional only emphasizes professional quality.
1. Investible Resource
: Such as plant and machinery. Plant and machinery generate output and creating a flow of income to the economy. From the Islamic perspective, to have such growth, the economy need capital and the capital can be derived from two sources namely internal and external
External source
can be derived from borrowing from other Muslim countries, so as to minimize the riba based debt.
Internal source
is normally from zakat, voluntary saving, force saving (EPF) and through taxes. It must be remembered that Usuary (riba) is considered haram. It is not allowed in Islam.