Accumulated knowledge and technological progress in terms of learning rates: A comparative analysis on the manufacturing industry and the service industry in Malaysia

Summary

Known as the largest exporter of rubber and tin for decades, Malaysia began its industrialization by shifting from agriculture towards the manufacturing industry. This study shows the recent signs of Malaysia's transition from an industrial to a post‐industrial age. This is similar to Japan's transition from an industrial society in the 1980s, with manufacturing technology at its center, to a knowledge‐based society, with information technology as its core, in the 1990s. Studying the Malaysian industries’ technological progress suggests that Malaysia is about to undergo a transition from a dominating industrial age towards an economy with a strong service industry. Continuous technological learning and management should be emphasized to help Malaysian industries in adjusting to a new era of global challenges while remaining highly competitive.

Measuring and monitoring technological learning is essential for technological capacity building and for policy management. This study measured the learning rates in the manufacturing and service industries of Malaysia. A dynamic cubic learning curve model was incorporated into a neoclassical production function and was used to measure learning coefficients in the Malaysian manufacturing and service industries. The findings demonstrated that the learning trend in each sub‐sector in both the manufacturing and service industries behaved in three distinct manners: convex with a minimum, concave with a maximum, and concave with no maximum. The identification of the performing, forgetting, and non‐performing years of each individual industry attests to the dynamism in the technological learning of Malaysia's manufacturing and service industries.

Keywords:

• Cubic learning curve
• learning rates
• manufacturing
• service industry
• Malaysia