Economic structural change and urbanization

The relationship between industrialization and urbanization

In the mid-1980s there was a gradual but obvious change in the nature of the Malaysian economy, as was examined earlier. In 1987, for instance, the agricultural sector share in GDP was exceeded by the share of the manufacturing sector. In 1990, the agricultural share was 19.4 per cent compared with 26.6 per cent for the manufacturing sector. Thus, there has been a change in the structure of the Malaysian economy from an agricultural base to a manufacturing base since 1987. This, indeed, marks a milestone in the country's transition towards an industrializing economy (Malaysia, 1991d).

It has often been argued that the process of urbanization and urban growth in the third world has taken place with the expansion of the industrial sector. That is true to a large extent in that, even without a substantial industrial base prior to 1957, Malaysia had experienced a large increase in its urban population, as shown earlier. However, with the growth of manufacturing since 1957, the impact on the process of urbanization and urban growth has been most tangible as the employment opportunities generated were located in the urban areas. This is certainly so after the mid-1970s when the accelerated urbanization was due largely to the rapid expansion of the industrial sector. McGee (1986) observed, for instance, that employment in the manufacturing sector increased steadily, especially in the 1970s, and its proportion of the Malay labour force grew dramatically from 20 per cent in 1970 to 54 per cent by 1980. He further pointed out that the five main urban centres of Kuala Lumpur/Klang, Ipoh/Taiping, Penang, Johore Bahru, and Malacca absorbed 55 per cent of the total increase in manufacturing employment in Peninsular Malaysia during the 1970s. In particular, Chi and Taylor (1986) discussed at length the role of the industrialized Klang Valley in the process of urbanization, especially in the 1970s. Young (1987) showed, for instance, that prior to 1970 the Malays were recruited largely into government and other public sector jobs and that dramatic structural changes in the occupations of the Malays and Chinese occurred only with the formation of Free Trade Zones and the consequent industrialization spearheaded by the electronics and textiles industries. In Inner Core Kuala Lumpur, for instance, out of the total population of 1.01 million in 1979, 42 per cent were lifetime in-migrants. The Malays comprised 38.5 per cent of the migrants, whereas the Chinese were 45.8 per cent and the Indians 13.7 per cent. However, this does not negate the fact that Malay urbanization has been the main contributor to current urbanization growth (Lee, 1980a). This is explained by the fact that Malay movements are not directed entirely to the Core Area. For instance, Malay in-migration on the periphery of the Core Area was higher than that in the inner areas (See, 1986). Looked at from another angle, out of the total Malay population 57 per cent were migrants, while 34 per cent of the Chinese were migrants. Further, the majority of the Malays arrived after 1970. The bulk of the migrants were from Selangor and Perak, representing 49 per cent of the total in-migrants, while the states of Negri Sembilan and Johore represented 20 per cent of the total. An interesting pattern of age-sex difference in migration patterns is that, after 1970, there were more female than males, and more than 57 per cent of the migrants were in the age group 20-45 years. Thus, the nature of the migrant population shows the necessity to provide more productive employment and more shelter.

In the 1980s, the greater zest in intensifying industrialization continued to be the prime mover in the process of urbanization. Under the Malaysian Industrial Master Plan (IMP) formulated in 1985, for instance, two broad groupings of industrial subsectors were identified. The first was resource-based industrialization (RBI), comprising rubber products, palm oil products, food processing, wood-based products, chemical including petrochemicals, non-ferrous metal, and non-metallic mineral products. The other, non-resource-based industries, included electronics and electrical, transport equipment including motor vehicles and shipbuilding, machinery and engineering, ferrous metal, and textile products (Malaysia, 1985b). Resource-based industrialization has recently become an important issue as a development strategy to restructure the Malaysian economy from a primary producing country to that of a newly industrialized economy by the year 2000 (Kamal Salih, 1988).

The relationship between industrialization and urban development in the 1980s can be seen in the pattern of location of approved industrial projects in 1990. The states of Selangor, Johore, and Penang, in which the main urban centres are found, continued to be favoured by investors for the location of their manufacturing projects (attracting 63.3 per cent of the total projects approved in 1990 alone). These states have lured a wide range of industries, particularly chemicals and chemical products, plastic products, basic metal products, fabricated metal products, electrical and electronic products, and transport equipment. Johore was a favoured location for textile projects, Selangor for rubber-based projects, and Perak for nonmetallic mineral products.

The effects of globalization on the urban system

In the 1990s, because industrialization is expected to provide the impetus for economic growth, it is inevitable that areas that have the initial comparative advantage in terms of infrastructure, labour, skilled manpower, and accessibility will attract industries. Although resource-rich states like Sarawak, Sabah, Trengganu, and Pahang will attract resource-based industries, on the whole industrialization, particularly the export-oriented sector, will concentrate in the western corridor of the Peninsular, with obvious implications for urban population growth. It should be noted that most of the industrial subsectors enumerated in the Industrial Master Plan are prone to clustering tendencies and hence will add to the agglomeration in and around large urban centres. It is expected, then, that the level of urbanization in Malaysia will reach 60 per cent by the year 2000, given the impetus of the international dimensions of economic activities.

While economic growth and development are and will be tending towards favoured sites and urban agglomeration, the pattern of globalization of the economic activities as outlined earlier will accentuate the present urbanization process. Essentially, globalized activities place a renewed and heightened emphasis on existing large urban centres that serve as export channels and possess developed infrastructural facilities. For instance, all the 11 Free Trade Zones and three-quarters of the industrial estates are located in the west coast states of Peninsular Malaysia in or near urban centres. Therefore, efforts to decentralize industries and other economic activities may not neutralize the locational bias towards Johore, Selangor, and Penang. Nodal urban regions of Johore Bahru/Pasir Gudang/Kulai, Klang Valley/Seremban, Seberang Perai/Bukit Mertajam/Kulim, etc. will become huge urban agglomerations that are shaped not just by national forces but, increasingly, by forces from the international arena. Elaboration of this point may be helpful.

A city region under global influence is shaped primarily by technological forces, particularly communications technology, and market forces that are normally beyond its control. These economic activities are performance based in the sense that industrial knowledge-based organizations must prove their viability by competing with organizations based in other places and countries. Thus, as communications improve, direct foreign investment into the country is facilitated. Physical, political, and psychological barriers no longer constrain industrialization opportunities from foreign sources. The globalization of economic activities would favour the city regions within a nation that have developed comparative advantage in terms of information flows with the rest of the world. It is a self-perpetuating momentum which will lead to greater urban agglomeration simply because the cities will focus their development on expanding their international activities as new opportunities are created and in order to make their places more supportive. It is, therefore, important to note that urban growth in the 1990s will be driven by these new forces as more direct foreign investment becomes available.

It is expected that the nature of industrialization and economic structural changes will lead to a disparity in urban types. On the one hand, rapid and voluminous investment in non-resource-based industries, financial, banking, insurance, and other service-related industries, will result in concentrations around existing urban regions (like Kuala Lumpur, Penang, and Johore Bahru), which are in a better position to respond to the demands of the global economy and will continue to evolve with macrocephalic tendencies, and also especially along transport corridors (Hall, 1985). This accentuation of urban growth resulting from the structural change in the economy is congruent with the "western corridor" concept of industrial location as detailed in the IMP, whereby the nation's industrial activities will be spread along the western part of Peninsular Malaysia following existing highways, railroad systems, and port facilities in order to minimize infrastructural expenses (Malaysia, 1985b; Kamal Salih, 1989). However, as it is, the principal industrial corridors are already almost saturated owing to infrastructural constraints.

On the other hand, although RBI may be scattered to the northern and east coast states, Sabah and Sarawak, the impact will be diffuse and minimal and other towns that are away from the principal industrial corridor will "continue to operate in a reactive mode and remain tied to outmoded visions based on projections of past trends and on traditional regional and national relationships" (Knight and Gappert, 1989). The tendency is for these areas to be under the shadow of the sprawling urban giants, less vibrant, hardly vigorous, or even neglected (Lee, 1989,1990).