June 26th, 2008 by Hafiz Noor Shams
I was reading the Mid-Term Review of the Ninth Malaysia Plan:
During the 2006-2007 period, real GDP expanded by 6.1 per cent per annum, exceeding the target of 6.0 per cent. Per capita income increased by 10.6 per cent per annum to RM23,066. Per capita income adjusted for purchasing power parity increased at a higher rate of 14.2 per cent to RM46,478 in 2007. This growth was achieved in an environment of stable prices. Unemployment stood at 3.3 per cent in 2007, reflecting the full utilisation of labour resources. [Full speech in Parliament by Prime Minister Datuk Seri Abdullah Ahmad Badawi when tabling the Mid-term Review of the Ninth Malaysia Plan. The Malaysian Insider. June 26 2008]
Someone, please enlighten me: why does the income per capita figure need to be adjusted to purchasing power parity?
So far, I see no reason why it should be adjusted. PPP is usually used to make comparison between countries. When there is only one country in question and we are dealing in terms of just a currency, why on earth would we need to adjust it for PPP?
Is the statement “higher rate of 14.2 per cent to RM46,478” meaningful at all?
Also of interest to me is this:
11. The nation’s robust economic growth has been spearheaded by the private sector, with private sector investment growing at a rate of 8.6 per cent per annum. Foreign direct investment also increased by 39.3 per cent to RM29.1 billion in 2007. At the same time, public sector investment grew by 8.9 per cent per annum following vigorous implementation of development projects under the Ninth Malaysia Plan. [Full speech in Parliament by Prime Minister Datuk Seri Abdullah Ahmad Badawi when tabling the Mid-term Review of the Ninth Malaysia Plan. The Malaysian Insider. June 26 2008]
Increased government spending typically crowds out private investment. I wonder how much the public sector grew at the expense of investment growth in the private sector.
Another question: how much of export has been sacrificed so far due to increased government spending?