Forestry Economics and Development in Malaysia

The study attempts to fill a gap in Malaysian forestry economics, an area relatively less probed compared to the other important primary commodities of Malaysia. The core of the thesis are two econometric studies. The first concerns estimating supply and demand elasticities of the three main Malaysian wood products sawlogs, sawnwood and plywood. Demand is split up into export and home demand to understand better the separate economic forces at work. Dynamic aspects, not previously considered, are incorporated in the model. Forecasts are made up to 1985 on the basis of these estimates. The model is applied to data covering the whole of the country as well as of each individual region Peninsular Malaysia, Sarawak and Sabah, to examine elasticity variations and aggregation biases. For Sabah and Sarawak, this is the first rigorous econometric analysis of wood products. The other econometric investigation is of estimating employment demand elasticities and the speeds of labour adjustment of wood-based industries in comparison with those in rubber and the oil palm sectors. Employment implications arising out of changes in output, as well as exports and home consumption are estimated. This involves both linear and non-linear estimation, the latter a novelty in studies of less developed countries. To understand better the implications of these two econometric investigations, the study also examines the role of Malaysia in the world hardwood trade and the economic, political and social influences at work in Malaysian forestry.