The Globalization of the Malaysian Economy
Economic 'globalization' is generally defined as the openness, integration, and interdependence of various economies, whereby economic activities, products, services, capital, intellectual properties and investments are flowed across borders; whereby global resources are operated internationally. Malaysia showed her commitment in accepting the challenges of globalization by joining the General Agreement on Tariffs and Trade (GATT), and further ratified the establishment of the World Trade Organization (WTO) on 6 September 1994 (to replace the GATT with effect from 1 January 1995). So far, globalization has yielded multiple effects to the Malaysian economy, both positive and negative. Since Malaysia's independence, she has been since one of the most globalized developing countries. Hence, globalization is claimed to be the major factor to Malaysia's phenomenal economic development and growth. As Anwar Ibrahim once mentioned, "Globalization has done us a good service, particularly in the economic sphere, a sphere in which the table has been turned, with the denominator fearing the loss of his domination." In essence to liberalize trade, Malaysia offered to reduce tariffs on 79% of imports in 1992, and converted non-tariff measures into tariffs, mainly for import licenses involving approval permits (APs). With these measures, Malaysia benefited from increased manufactured exports and improved consumer welfare. These measures also saw her trade to Gross Domestic Product (GDP) ratio rising, and index of trade liberalization decreasing, indicating the increase in her economic liberalization year-by-year. In addition, several globalization steps in the agricultural market, such as reducing most of the major agricultural products' tariffs by 35%, and converting all non-tariff import regulatory measures to tariffs have improved the access of this sector to markets for manufactured exports. On the other hand,...
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