ABSTRACT
This chapter seeks to examine the nature of a sectoral shift from manufacturing production to services in two East Asian developing countries. It does so by comparing Malaysia and China's shift from manufacturing to the production of services, with the objective of identifying similarities and differences, including the challenges and prospects of this shift. In particular, it seeks to examine the role of policies in driving this shift. The chapter traces when the shift to services occurred in Malaysia and China based on output and employment while the third section compares the policies used to promote this sectoral shift and the rationales for the policies in each country. Special economic zones have been used in the development of services for both countries. In the case of Malaysia, the Multimedia Super Corridor (MSC) is a government initiative to push the country toward high technology activities in the information, technology and communications (ICT) sector.
