Just a thought. (It's been quite sometime since I've written anything about Knowledge Based Economy - Mind you, I am NEITHER a qualified economist or forecaster, I would rather say that I am the DIY type of economist, the street smart style - so don’t take my views oo seriously especially when making formal economic decision..it’s just my personal views.)
I think the new Government efforts to improve Malaysia's economy would eventually result in a boost!! (Reduce corruption, declaration of wealth by high officials, reduce dependence on foreign workers, eliminate GST etc)
To start with, there have been efforts to improve market self-regulation, efficiency and innovation rather than worrying about inflation and asset bubbles (like what typical bankers would do) Supply and demand equilibrium (Keynes) should already become HISTORY. Capital markets will not work properly if financial element are not being looked at. We are also forgetting how Corporate Governance principles being discarded and the disasters that came afterwards were unimaginable (Enron)
But the ones that is really suffering is the common PEOPLE like me...
Apart from depending too much on FDI and trade volumes, efforts to focus on Malaysia’s domestic economy as a priority is not being neglected.
I remember reading some case studies involving Denmark and Ireland where both countries succeeded in reducing country's deficits; ironically according to Keynes probably this will cause recession; but to everyone's surprise, the economies of both countries got out of the recession very quickly. Malaysia can too and we are doing it by cutting the spending and other kinds of "cuts here and there".
But please, let the interest rates stay for now, do not lower or increase them FOR ANY REASON (unless our currency rates and exchange are stable and under control) - yeap, we might lose something along the way, but think of the long term positive impact. (just like the Tun M's legendary pegging of Ringgit against USD in the past). And Feds : no more "scaring forecast" about "hike in interest rates" - it will cause panic in the global stock market!
One of the reasons of Denmark and Ireland's success; I think; is the rejection; to the idea of borrowing to improve purchasing power of the people - well guess what? Many people save rather than spending!! Surprisingly, the cancellation of GST might improve the purchasing power..hence improve customer confidence..hence improve stock/share market!
So, the lesson that I’ve learnt is that the most difficult model is trying to "assume the economics of human behaviour" (Well, you can't!)
I also share the idea of "making more debts" are NOT working anymore, since it has been proven that "borrowing" HAD directly affecting the economy especially in the past : when politics are mixed with economical decisions and policies.
So, I think the "monetary funds entity" should be making some changes on their economic and financial perspectives - no more "Free Trade" and how this will so-called affect employment opportunity, capital and labour.
So, between less borrowing VS budget cuts...I go for budget cuts.
Many people still like to think “in the box” despite claims that “they are thinking out of the box” hahaha. Example that if A is done, B will follow and the "soothsayer shamans" will start forecasting that a certain country's economy will fall. There was not even sufficient space provided for the economy to prove itself first in a certain period of time (self-regulation)
Funny, recession forecasts many times have been proven WRONG. Take Brexit for example - many believes that the UK economy will be "very bad"...but UK’s economy has improved! So will countries leaving EU, it may have a short term impact but in the long run, look at "exiting" countries now? (Did it work?...YES)
Trust me, I "predict" some smart alecs will start forecasting negatively on the TPP issue if Malaysia decided to pull out. (kudos to US to take such action) So, if Brexit works good on UK’s current economy, TPP also works for the US, so Malaysia will also benefit as well if a pull-out from TPP is to happen.
Forecasters sometimes (not all) tend to safeguard their professionalism and the forecast must be made in line with politics - so, the results are : economic chaos. (well, forecasters are not always right! They are just doing their job by painting rosy pictures) Models; they used; NEVER predicted economical crisis or recession or depression. That's where problem will start. Need I say more?
Experiencing and learning from the bad past to create an economic model of reference can be good but by frequently using the past as “a gospel” it will definitely put the economy in a causality loop - "repeating the same mistake" over and over again.
One Cambridge study says the loss peaks at 3% of GDP early in the 2020s. The loss of GDP per head is smaller – never much more than 1% – and soon recovers (The Guardian) I think this is a brave economic model. Remember, GDP is NOT the only indicator of economics. We need more Cambridge-Oriented type of innovations.
I am looking into Austria, they seemed to do things their own way and it is working.
HAIL TO THE POWER OF KNOWLEDGE-BASED ECONOMY