Trade Openness and the Development of Domestic Business in China and Malaysia
Trade Openness and the Development of Domestic Business in China and Malaysia
I. Introduction
Economic growth for many emerging East Asian economies has gone hand in hand with their trade openness to the world. As Stiglitz (2000, p.A17) puts it, “Of the countries of the world, those in East Asia have grown the fastest and done most to reduce poverty via globalisation.” Jin (2006) also points out that the East Asian countries have achieved rapid economic growth over the last twenty years, and this growth has been accompanied by persistent openness to world trade.
However, when we do further research, we may start to doubt whether those emerging countries are really bigger winners in the game of trade openness. Will the economic growth accompanied by the opening of their economy last long? Will trade openness harm domestic business in the long run? It seems that too much attention has been paid to economic growth of these open countries. In contrast, the development of the domestic business has not received sufficient concerns. This paper will critically discuss the impact of trade openness on the development of domestic business by employing empirical evidence from two of the emerging countries in East Asia: China and Malaysia.
For this study, two cases are taken, of which one is from China’s automobile industry and the other is Malaysia’s manufacturing industry. The automobile industry is chosen for China because it is a key industry. It has expanded remarkably over the reform years and typically accounts for an increasingly larger share of industrial production, output, exports, and employment (Buckley et al., 2007). The development of the automobile industry has a great impact on China’s domestic business. The manufacturing industry is chosen for Malaysia because since the middle of the 1980s, the manufacturing industry has been an important engine of growth for the Malaysian economy (Nair et al., 2006).
By means of probing deeper into the dimension of
I. Introduction
Economic growth for many emerging East Asian economies has gone hand in hand with their trade openness to the world. As Stiglitz (2000, p.A17) puts it, “Of the countries of the world, those in East Asia have grown the fastest and done most to reduce poverty via globalisation.” Jin (2006) also points out that the East Asian countries have achieved rapid economic growth over the last twenty years, and this growth has been accompanied by persistent openness to world trade.
However, when we do further research, we may start to doubt whether those emerging countries are really bigger winners in the game of trade openness. Will the economic growth accompanied by the opening of their economy last long? Will trade openness harm domestic business in the long run? It seems that too much attention has been paid to economic growth of these open countries. In contrast, the development of the domestic business has not received sufficient concerns. This paper will critically discuss the impact of trade openness on the development of domestic business by employing empirical evidence from two of the emerging countries in East Asia: China and Malaysia.
For this study, two cases are taken, of which one is from China’s automobile industry and the other is Malaysia’s manufacturing industry. The automobile industry is chosen for China because it is a key industry. It has expanded remarkably over the reform years and typically accounts for an increasingly larger share of industrial production, output, exports, and employment (Buckley et al., 2007). The development of the automobile industry has a great impact on China’s domestic business. The manufacturing industry is chosen for Malaysia because since the middle of the 1980s, the manufacturing industry has been an important engine of growth for the Malaysian economy (Nair et al., 2006).
By means of probing deeper into the dimension of
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