The Effects Of Human Capital On Malaysias Maunfacturing Productivity Growth

Abstract

The objective of this paper is to examine the effects of human capital on the productivity growth in Malaysias manufacturing sector. To achieve this, labour input was subdivided into skilled semi-skilled and unskilled. The study found that materials account for the largest cost component in the sector although shortages of skilled labour constitute a serious constraint on capital utilisation. In addition, the contribution of total factor productivity (TFP) growth of the sector was generally found to be very low particularly during the second sub-period of 1987-2001. The improvement and slowdown of TFP contribution to manufacturing sector in terms of average annual growth rates were dependent on the inputs used in production, believed to be of low quality and insufficient.