Information and Communication Technology (ICT) and human capital management trend in Malaysia's economic development

Abstract

Testing for stationarity, cointegration and structural break for the ICT data are significant to determine Malaysia's economic growth. This article finds that the ICT follows similar trend as Gross Domestic Product (GDP), capital and employment data. The cointegration test suggests that ICT follows a long-run equilibrium in relation to GDP, capital and employment variables. The test for parameter instability for ICT indicates 1986 as the breakpoint, which is indicative of the structural transformation in Malaysia's economy. This is crucial finding as it provides more conclusive evidence on structural breakpoint in Malaysia's economic data, as opposed to noneconometric method. Human capital is synonymous to knowledge accumulation, thus significant in the development of the ICT and long-run economic growth.

Notes

¹ A policy decision by the government saw the corporatization of the telecommunication department in 1987. Since then several other government agencies such as the national Airlines, the national train service have also undergone similar business transformation.

² Malaysia consists of Peninsular Malaysia, Sabah and Sarawak. Prior to 1965, Singapore was part of Malaysia.

³ www.telekom.net.my

⁴ ICT goods classification, based on HS 1996, proposed by OECD.

⁵ The GDP of the manufacturing sector overtook the GDP of the agricultural sector for the first time in 1987. Due to this, the manufacturing sector was recognised as the engine of growth in Malaysia in 1987, thus the economic structural transformation.