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Foreign Manufacturing Investments in Resource-Based Industries Published online by Cambridge University Press: 21 October 2015
The development of resource-based industries has featured importantly in the industrialization strategies of both Malaysia and Thailand. Agriculture had been the leading economic sector in the two countries until very recently. Since 1987 manufacturing has overtaken agriculture and is continuing to expand rapidly. Both governments are giving prominence to industrial development in their economic development strategies (Ng, Hirono and Siy 1986). Given that the two nations are noted to be resource-rich countries, it is only natural that resource based industrialization should become a cornerstone of their industrial policies.
Resource-based industries (RBIs), defined simply, are generally taken to mean those industries that are involved with the downstream processing and manufacturing of the country's agro and mineral products, usually termed “primary industries”. The discussions here will focus on the manufacturing industries that make use of the products of the primary industries and convert them into higher value-added finished and semi-finished goods.
In a survey of resource-based industrialization in the developing countries (DCs), Roamer (1979) has attempted to shed light on the potential contribution of industrialization based on resource processing to efficient growth, employment creation, greater equity and economic independence. Two industrial strategies that are primarily based on the utilization of natural resources have been receiving emphasis in the developing countries. One is that of the more complete processing of raw materials for export; the other is the utilization of domestic resources mainly for domestic consumption. Generally, a major portion of resource commodities is exported in unprocessed form. There is, therefore, considerable scope for further processing or fabricating these products for export or for home use.
However, since it is not obvious that resource-based industrialization is better suited to achieve national development goals than other potential strategies, the Roamer paper surveys the development literature to throw light on related issues of economic development. The highlights of his survey are as follows.
With the exceptions of wood products, processing tends to have a high capital-labour ratio.
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