Canada shares vast resemblances with Sabah in its economic history. However, would Sabah takes on Canada’s history and prosper in its own term? There may be many invaluable lessons we could learn from Canada to push Sabah to its future.
In Canada, the lands are well blessed with immense of natural resources, especially timber. During the early Canadian history, economic growth was mainly based on the exploitation of these natural resources before it took on the three-sector hypothesis into manufacturing sector before finally settled to the tertiary sector. Their current service industries constitute about 70% of Canada economy, whilst its primary sector tied at a mere 7%. As Rome wasn’t built in one day, Canadian transition has had its rather long history.
Although fur was its initial source of exports, it was replaced by timber due to its increasing prospect especially from Britain where the timber was in large demand by the British. These demands inevitable pushes up the employment in Canada as there’s immense needs for logger to provide these timbers. This scenario resembles some of the features in Sabah today; Revenue from exporting timber being Sabah’s main source of income. The demand for timber, needlessly to say, is still as high as the old heydays of Canadian timber bloom. Only difference between the two is, instead of a commodity back then, timber has sort of become a luxury in the 21th century today. These facts spring a rather benign future for the timber industries, especially for Sabah’s quality kayu balak.
The bloom, with the Canadian pursuit of a more cost-efficiency transportation, was further assisted by the famous Grand Trunk Railway of Canada and the opening of various canals. These infrastructures had undoubtedly contribute to the mobility of labours not only between Canada, it railway line was extended to US, encouraging the possibility of trade integrations. It unleashed new potentials that propelled the country as one of the fastest growing economy in the late 18th to early 19th century. The availability of these infrastructures did not only lower the cost of transportation, much like Midas’ magical touch, it flourished the cities that it built by; Many industries centered in the west only started to boom when Canada began to lay out railways across the continent. Coupled with adequate policies and institutional trust, Canada nourished into a country with potential future. Sabah, on the other hand, has its brief railway development. Stimulated by the economy growth, North Borneo built a railway linking from Bakau River to Beaufort and later extended to Jesselton. However, since the Penisular-Borneo integration, there aren’t many major extensions thus leaving the rail length in Sabah about 134km as compare to the 2000km rail track in Penisular today.
It is a common knowledge that continuous logging will exhaust the availability of high quality timber one way or another. The industry will eventually meet its inevitable collapse. The destruction does not constraint only to timber industry, it can spread out to almost all other primary industries particularly agriculture, oil extraction and fishing. The Canadian saw the primary sector’s fate, decided to shift their economy dependency from raw materials to manufactured goods by the means of industrialisation. Canada move to industrialisation was certainly a right move. In 20th century, Canada saw a vast increase in economics growth and a significant decrease in unemployment. Canada manufacture industry also further nourished by US automobile industry as producers in Detroit, Michigan moved to Canada, where the cost of production is lower compare to the ones in US. Manufacturing share of the economy peaked at 30% of the GDP at the mid-20th century, and the unemployment was near to zero.
As predicted by Clark’s hypothesis, the manufacture industry in Canada slowly moved to its inevitable end, the tertiary sector. It is of this transition, the Canadians are getting increasingly rich. At this moment, the service industry now forms approximately 71% of the economy. Retail sector is the biggest of all other service industry followed by business services and includes finance.
These transitions have given Canada an exponential growth in its economy, a significant increase in Canadian’s imposable income as well as their ability to buy, and their quality of life, e.g., healthcare and education. This positive growth is also accompanied by its openness towards international trades. Take the establishment of North America Free Trade Area (NAFTA) for instance; it eliminates the tariffs between North America countries’ borders making some of the imports cheaper than other countries, thus an increment in sales. The openness towards world trade also enable the Canadian to import goods that are not found in Canada, and able specialise in the good that has comparative advantages to Canada.
Sabah, on the other hand, was not able to reap these fruits of adequate developments mainly due to the inefficiency of government intervention; its federal conservative nature as well has the freedom to the local statesmen. To take on the future of Canada, Sabah ought to take some of the footstep Canadian left in their economic history.
[Lazy put graph and hasn't done citation yet.. whateverrrr]
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