National Key Economic Area Multiplier Impact On Malaysian Economy: An Input-Output Analysis

Abstract

The ultimate aim of this research is to provide an analysis of the impact multipliers on the Malaysian economy for 12 NKEA sectors. Economic activity is a complicated web of interdependent behaviour. A change in any part of the economy leads to changes elsewhere. Consequently, the estimation of the ultimate total impact of a change in the NKEA requires the measurement of the changes that occur elsewhere in the economy. The technique available to obtain these measurements is called input-output (I-O) analysis. I-O analysis is concerned with studying the interdependence of the producing and the consuming units in the modern economy. Our computation of complete I-O multipliers includes total output, income, employment, value-added, imported commodity, domestic taxes and imported taxes multipliers for the NKEA. Among the NKEA sectors, the palm oil, tourism, education, healthcare and other sectors have great potential for further development and are expected to give a high impact on the Malaysian economy. If the government wishes to boost the Malaysian economy for growth, these are the appropriate sectors for development.

 

Keywords: NKEA, input-output analysis, multiplier impact.