ASSIGNMENT: THE STUDY ON THE IMPACT OF INTERNATIONAL INTEGRATION

TOPIC: ECONOMIC PERFORMANCE OF RURAL AREAS IN MALAYSIA

NAME: SHALINIE A/P NARENDRAN

STUDENT ID: 22050002

MODULE CODE: FSS015

INTRODUCTION TO INTERNATIONAL INTEGRATION
TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION & ISSUES

CHAPTER 2: LITERATURE REVIEW

CHAPTER 3: ANALYSIS ON THE POSITIVE IMPACT OF INTERNATIONAL INTEGRATION

CHAPTER 4: ANALYSIS ON THE NEGATIVE IMPACT OF THE INTERNATIONAL

INTEGRATION

CHAPTER 5: SUGGESTION

CHAPTER 6: CONCLUSION

INTRODUCTION

Malaysia capture independence in 1957, and from then until 1990s, its economic policies
prioritized rural development. The rural sector is critical to the development of the nation’s
economy, society, and politics. Poverty, low productivity, a lack of core social and economic
infrastructure, and market flaws are just a few of the sector’s distinguishing characteristics.
Malaysia policies, approaches, and programmes for rural development have been developed
since the 1960s. Whilst the rural economy is concentrated on agriculture, agrarian reform, a
basic component of agriculture policy, has been crucial in transforming the impoverished
community into a sector focused on commerce. Growth and equity are the dual goals that guide
development initiatives. The government’s strategy has had some of the expected results, but
there is still a significant and visible level of poverty and inequality within and between sectors.
As a result, rural development continues to be a primary focus for the nation’s development
initiatives.

A context for the economic performance of rural areas is provided by the factors
influencing the variations in economic performance within rural areas, which are based on five
kinds of economy capitals. It implies that community development theories, hybrid exogenous
and endogenous development techniques, and development based on the exploitation of social
and cultural capital are essential to sustaining growth. An active debate over what is currently
generating uneven spatial development in the majority of rural areas of emerging countries has
been sparked by a growing body of literature. The OECD’S (The Organization for Economic
Cooperation and Development) earlier discussions on “territorial indicators of rural development
and employment” showed the variation in rural economic performance even within the same
types of rural areas and proposed a set of “territorial dynamics” or factors that might explain
those variations.

1.1 ISSUE

The population issue has had an influence on the majority of Malaysia’s rural districts.
As evidence, the population has been slowly falling over time. Loss of agriculture production, a
lack of economic opportunities in rural areas, rural-urban migration, and a lack of government
incentives for buying rural goods are the main causes of population reduction. One of the key
variables affecting this pattern has been migration from rural to urban areas. Moving from rural
to urban areas is the only way to find suitable employment and higher income, which adds to
the population decline in rural areas. Also, rural households have trouble with the difference in
household income between rural and urban.

The average monthly household incomes in urban and rural areas are shown to differ
significantly, even if the overall revenue for the two regions is seen to increase year over year.
The physical and economic effects of urban expansion have unintentionally migrated to rural
areas, despite the government’s current efforts to improve people’s wellbeing having reduced
the income gap between urban and rural areas year after year. It is crucial to go into further
detail when discussing how variations in factors affect economic performance in rural areas in
Malaysia, both within and between rural areas.
 The steady loss of the rural population has led to issues like out-migration, aging
population, labor shortages, social problems, land fragmentation, youth unemployment (young
people lack interest in agriculture occupations), reliance on government, and other other issues.
Youth out migration is significant in rural areas, especially for those between the ages of 20 and
29, accounting for about 36.6% of all youth migration. Although poverty has significantly
decreased since 1970, it is still a problem in rural regions and is expected to stay that way. We
must not forget about the modest capital investment made by the public and private sector in
rural economic growth. In addition, there is a lack of “Hard Infrastructure” development and a
problem with how to use land.

LITERATURE REVIEW

More than 46% of the world’s population today resides in rural areas. Rural communities
and their growth have historically occupied a prominent position on the national development
agenda because they are essential to a nation’s political and economic stability. The provision
of public services and infrastructure, resettlement programmes, agricultural development, and
community development are just a few of the initiatives and regulations that have been put in
place to advance the welfare of rural inhabitants. Yet, academics and international organizations
have raised concern about the cycle of rural decline that currently affects most rural
communities around the world. The majority of rural areas are coping with both the more difficult
problem of interrupting the cycle of decline as well as rural decline, which has an immediate
impact on rural development.

The Sustainable Development Goals (SDGs) seek to eliminate extreme poverty,

starvation, open defecation, and other serious problems in developing nations brought on by a
lack of public utilities, particularly in rural areas, as well as to narrow the enormous inequalities
between nations and regions. As a result of rapid economic growth and also globalization, rural
and urban communities are facing new challenges. This isolated and disadvantaged rural
community faces numerous challenges in achieving social sustainability and economic equality.
As a result of their involvement in the unorganized sector and the unhappiness brought on by
stagnant agricultural production, they have experienced minimal economic growth. The
economically underprivileged have been particularly hard on rural areas. One of the most
efficient and popular approaches to solving the numerous issues that rural communities face in
rural economic revitalization. In order to reverse rural fall, establish a more resilient, sustainable
and diverse local economy, and enhance rural community quality of life, rural revitalization is a
process and approach that involves all facets of rural life, including the economic, social,
human, cultural and environmental aspects.

Reliable public services, along with technological, socioeconomic, and environmental

criteria to support regional economies and urban-rural connections, must meet the basic needs
of rural populations. This all-encompassing strategy is crucial for rural development that is
sustainable. Rural communities must develop a variety of non-farming occupations in parallel
with an agricultural system if they are to be more resilient to economic shocks or environment
disruptions in the context of climate change (tailored to local geographical conditions). Rural
communities should be given the same consideration and the chance as urban communities
when it comes to sustainable development policy and funding for infrastructure projects, say
decision-makers, educators, and professionals.

ANALYSIS ON THE POSITIVE IMPACT OF INTERNATIONAL INTEGRATION

The complementary nature of inputs in a particular rural production function and the
synergy, or beneficial interactions, among combined rural production functions are two
economic benefits of the integrated approach to rural development. According to the
complementary principle, the availability and amount of other inputs determines how well one
input can be used. For instance, the results obtained when using high yield seeds rely on the
quantity and timing of the fertilizer and water applications. The inputs must be presented in a
coordinated manner that acknowledges their complementarity in order to provide the greatest
results. Experience demonstrates that there exists synergies for the moral general, higher-level
objectives of rural development, notwithstanding their relative lack of understanding. Integrated
rural development initiatives are justified due to the connections between health, education,
basic infrastructure and agriculture.

In some circumstances, integrating to capture complementaries can lead to positive

interactions that improve the output of the integrated units. Its potential for synergy has been
used as a primary advocate of integrated rural development. According to the rationale,
integration could lead to synergy for the following reasons. First off, when service providers
work together, resources are used more effectively because there is less need for service
duplication by those with less experience. For instance, rather than requiring each integrated
unit to manage its own fleet of vehicles, if one unit excels at managing a motor pool, it can do so
for the integrated units. The efficiencies attained allow integrated units to profit from each
member unit performing what it does best. Second, integration will provide economies of scale
in the provision of services, requiring less resource-both human and physical-to achieve the
same or more output.

Third, because integrated rural development always aims to produce community goods,
it will prevent the inefficient production of those goods that happens when non-integrated units
operate separately. For example, one ministry might gather data on a rural population for use by
another ministry. If both ministries operate within a framework for integrated rural development,
they can make use of the data, if they do it independently, they must separately gather the
same information.

Fourth, integrated rural development makes it possible for service providers to profit from efforts
of other organizations, as when the Ministry of Transportation’s operation to rebuild roads
enables the Ministry of Agriculture to more successfully move produce from rural areas to
markets. Area development programmes that highlight the advantages of cooperative planning,
monitoring, and evaluation as well as mutual sequencing of actions by the multiple agencies
involved make a strong argument for this aspect of synergy.
 ANALYSIS ON THE NEGATIVE IMPACT OF INTERNATIONAL INTEGRATION

Corporate market expansion, for example, takes precedence over everything else, and
the government only exists to support commercial profitability. The provision of local services,
amenities, and benefits is then abandoned by national governments or transferred to
underfunded local governments. Family farming is being replaced by industrialized (corporate)
agriculture, even as family farms “incorporate” and “grow bigger” in an effort to survive. The few
remaining “family farmers” are struggling to make ends meet and are heavily indebted. Family
farms in rural communities that no longer have a customer base close their doors, contributing
to the decline of rural areas. The focus of agriculture output is on export rather than domestic
consumption, and prices are set by international rather than regional markets. Farmers, for
instance, accept prices set by multinational corporations.

Endless poverty, which is defined as a lack of resources that prohibits participation in

practices, rituals, and diets universally accepted by society, develops from rural poverty. Small
ranchers and farmers suffer, agricultural sales decline, rural areas become less populated as a
result of changes in the local economy’s structure (such as pay reductions, declines in full-time
employment, increases in part-time labor, and declines in full-time employment, increases in
part-time labor, and declines in local tax bases). Deregulation, on the other hand, could have
unfavorable effects, such as the removal or lowering of limitations on “business” operations. Re-
regulation based on laws imposed and backed by multinational corporations results from this.
Due to out-migration, the concentration of social services in larger population centers, and rising
debt levels, rural incomes are being dramatically cut and inhabitants are having a harder time
accessing social services. The privatization of public welfare services like public transit,
healthcare, social services, and education is the last way privatization is proven. In some
places, the provision of power, petrol, and water has already been privatized. National minimum
wage rates are replaced by locally negotiated (and lower) wage rates. Moreover, developments
in employment and unemployment.

Indentured, child, and slave labor, “flexible” work, part-time jobs, and higher
unemployment rates replace full-time, living-wage employment as a result. Then there is
consumption and commoditization. Hence, if something can be commodified and sold, it will.
This includes both concepts and tangible things, such as the way the “rural ideal” is consumed
in tourism. The sole purpose of human existence is to consume goods produced by the world
economy. Nothing is valuable unless it can be eaten.

RECOMMENDATION and SUGGESTION

Relevant organizations were forced to identify solutions to reverse rural decline due to
variations in economic performances in rural areas brought on by a variety of causes. One of
these options is rural revitalization. A comprehensive strategy that takes into account the local
economy, physical environment, political environment and social environment is needed for
rural revitalization. Rural revitalization may be a key component of the revival process in this
sense because it is connected to economic planning and strategic spatial planning.

Significantly, this framework for rural economic revival was used as an all encompassing
approach to address rural issues and difficulties at two spatial scales: the village and the
individual home. In addition, spending on rural infrastructure, health care, education and
environment protection is essential for long-term rural development and can boost overall
national well being. In addition, to meet fundamental needs, investments must have the
potential to boost production and income.

Furthermore, area development is also acknowledged as one of the strategies put forth
by the New Economic Policy (NEP) to end poverty and organize society. The objective of the
policy was to promote the modernization of the agricultural sector using contemporary methods
of production. Additionally, support services for agriculture are offered, including extension,
credit and better marketing arrangements. The rural sector is also modernized through the
direct and indirect involvement of the farming community in the creation and operation of rural
industries and commercial enterprises, as well as the expansion of urban services.

CONCLUSION

In conclusion, after independence through the 1990s, rural development was the main
focus of government policy, strategy and programmes, with a decreased emphasis in the
century that followed. The economic, social and political development of the nation depended
heavily on the rural sector. The sector played a crucial role in supplying the country with
agricultural labor and output, but the high prevalence of poverty that characterized the sector
constituted a serious danger to the social and political stability of the country. The multifaceted
importance of this sector has served as the fundamental foundation for all Malaysia
development and economic plans since the 1960s. Five kinds of economy capitals serve as the
foundation for measuring the economic performance of rural areas in Malaysia (economic,
social, human, cultural and environment). It offers a thorough method for evaluating
performances, addresses rural difficulties and obstacles, and can be utilized as crucial
instruments to address issues that have been recognized and produce concrete solutions.
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