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TOPIC 1: INTRO TO ECO. DEVELOPMENT - Coggle Diagram
TOPIC 1: INTRO TO ECO. DEVELOPMENT
MALAYSIAN HISTORY
3. New Economic Policy
(1971-1990)
Aim: Reduce income inequality between ethnic groups.
Growth of manufacturing sector (electronics, textiles).
Rise of Bumiputera enterprises.
4. Vision 2020 Era
(1991–2000)
Malaysia aims to be a high-income nation by 2020.
Launch of Multimedia Super Corridor (MSC).
Export-driven economy and investment in infrastructure.
2. Post-Independence Phase
(1957–1970)
1st Malaysia Plan (1966): focus on rural development.
Heavy reliance on agriculture and commodities.
Limited industrial base.
5. Globalisation & Financial Crisis
(2000-2010)
Asian Financial Crisis (1997) & Global Recession (2008).
Shift towards knowledge economy.
Emphasis on foreign direct investment (FDI).
1. Colonial Era (Before 1957)
British structured the economy to serve colonial needs.
Rubber and tin were main exports.
Import of foreign labor: Chinese (mines), Indians (plantations).
6. Digital Economy & IR 4.0
(2011-PRESENT)
Rise of the gig economy, e-commerce, and fintech.
Industry 4.0 initiatives and automation.
COVID-19 accelerates digital transformation.
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
annual rate of change in real GDP
Measurements Tools
1. Gross Domestic Product (GDP)
shows the size and performance of an economy.
2. GDP Growth Rate
Shows how fast the economy is growing or shrinking.
3. GDP per Capita
Tells us if people are, on average, better off economically.
4. Productivity (Output per Worker)
Measures how efficiently labor and capital are used to produce goods and services. Higher productivity = more output with same resources.
5. Industrial Production Index
Measures the output of industrial sectors (manufacturing, mining, utilities).A high index signals growing industrial activity.
6. Investment Levels
Higher investment supports future growth.
7. Unemployment Rate
A falling unemployment rate often signals a growing economy.
WHAT IS ECONOMIC DEVELOPMENT
Definition:
process of improving
the
economic well-being
and
quality of life of a population over time.
It involves
sustainable increases in income, better access to education and healthcare, job opportunities
, and a
reduction in poverty and inequality
.**
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.
Measurements Tools
3. Gini Coefficient
Measures income inequality (0 = perfect equality, 1 = total inequality).
4. Access to Basic Services
Healthcare, education, clean water, electricity, internet.
2. Multidimensional Poverty Index (MPI)
Measures deprivations in health, education, and standard of living.
5. Employment & Job Quality
Not just number of jobs, but decent wages, safety, security.
1. Human Development Index (HDI)
Published by the United Nations Development Programme (UNDP).
Combines life expectancy, education level, and income per capita.
6. Environmental Sustainability
Development without depleting natural resources or harming future generations.
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.
