Analyzing the importance of transportation and financial services sectors using economic linkages analysis

For decades the agricultural sector has been the most important sector in Malaysia. It was followed by the magnificent growth of the manufacturing sector before the closing of the 20^th century. However, after the year 2000, there was a tremendous growth in the service sector worldwide. This scenario has embarked the government to focus more emphasis on the growth of the service sector. It is evident that in 2010 alone, this sector contributed about 58.5% share of the gross domestic product (GDP) in Malaysia. Out of all the service sectors, two-subsectors, namely the transportation and financial sub-sectors account for more than one-third contribution to the national GDP. This paper attempts to analyze the importance of the transportation and financial service sub-sectors in Malaysia using economic linkages analysis. From this approach, we could calculate the values of the backward as well as the forward linkages of various sectors in Malaysia using available input-output tables. Thus, we could reveal the strength of both the transportation as well as the financial sectors as the suppliers to or consumers of other sectors in the economy. In retrospect, the analysis can be used as an economic planning tool whether the government could embark on a more rigorous effort to enhance these two-subsectors as good spots for future growth potentials.