ICT, Human Capital and TFP in Malaysia: A Statistical Approach

Year 2007, Volume: 2 Issue: 2, - , 01.12.2007

Jorah Ramlan Elsadig Musa Ahmed Leo Pointon

Abstract

This paper finds that the contribution of Information and Communication Technology (ICT) to Malaysian economic growth is the highest at an average of 13 percent for the period 1966 to 2005 against 4.7 percent for Total Factor Productivity (TFP), 9.7 percent for Gross Domestic Product (GDP), 9.6 percent for capital, and 3.0 percent for labour. The decomposition of human capital growth indicates that the contribution for ICT intensity at 14 percent is highest in the sub-period of 1987 to 2005, while TFP is 2.1 percent, output-human capital ratio is 6.6 percent, capital intensity is 6.1 percent, and labour productivity is 3.4 percent. This suggests that Malaysia's ICT commitments are significant to the development of human capital in Malaysia. However, the results for TFP suggests that Malaysia's productivity is input driven, thus indicating that the policies and programmes to increase the rate of TFP have been unsuccessful.

Keywords

Malaysia ICT TFP, Labour Productivity , Human capital JEL classification: E23 C22