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the total word limit is 1300 words for answering the three question that in task 2

2) Task 2 (95 Marks) Task-1 Case Study Analysis: Malaysia's Economic Plan: Growth, Crises and Development Until 1963, when the country gained independence from British rule, Malaysia's domestic economy had been supported by its strategic location on the Strait of Malacca, a narrow passage of water to the south of the Malay Peninsula that functions to this day as the main shipping channel between the Indian and Pacific Oceans. The occupying powers exerted a significant degree of control over goods that passed through the strait, bringing items such as spices and porcelain into the Malaysian market and establishing the island as a lucrative trading destination. Malaysia's strategic geographic position was bolstered by its natural resources, which include large tin, oil and natural gas deposits, along with an abundance of rubber and palm trees. "Natural resource exploitation agriculture was part of colonial trade patterns, from which Malaysia historically had not benefitted much. It was more the occupying powers that benefitted from their riches. As such, these industries, while enough to subsist on post- independence, would not catalyze the level of recovery and growth that Malaysia sought. Moreover, the prices of Malaysia's natural resources were extremely volatile, meaning any economic progress was contingent on positive market movement. Fluctuations in the price of oil (also) meant the Malaysian economy was highly vulnerable to negative external shocks. Rubber suffered particularly heavily in the 1960s, as the rise in usage of its synthetic alternative drove prices down: this weakened Malaysia's rubber production sector, in which a third of the native Malay population worked. Constant competition to keep prices low propagated poverty among these workers, making both economic expansion and social mobility nearly impossible. For these reasons, in the 1970s, policymakers decided that a transition to a third-sector-driven economy was in order. It became very clear that manufacturing in particular was really the key to industrialization; commodity dependence was perpetuating underdevelopment. This tactic proved fruitful for the Asian Tigers, which had undergone a similar transformation a decade earlier. To achieve this evolution, the Malaysian Government invested heavily in manufacturing-based industries, particularly electrical and electronics products, which are seen today as the "spearhead of Malaysia's industrialization drive". Alongside domestic funding, the Malaysian leadership advocated strongly for foreign direct investment in the manufacturing sector, which was led predominantly by Japanese and American conglomerates. The government's diversification plan was successful, resulting in the country posting annual GDP growth of more than seven percent throughout the late 1980s and early 1990s. GDP expansion peaked in 1996, reaching 10 percent - an extraordinary feat for a country that had been under occupation 33 years earlier. The plan-driven [economic] approach was certainly part of the success of the East Asian economies. South Korea is maybe the best example... In the 1950s, it was one of the poorest countries in the world, then it caught up at incredible speed. South Korea became a role model for Malaysia [in that regard)." However, the country's Asian Tiger aspirations were brought crashing down by the 1997 Asian financial crisis. This was initially caused by the collapse of the Thai baht in July that year, but contagion quickly spread across South-East Asia as stock markets were devalued and currencies, including the Malaysian ringgit, were heavily traded. Over the following six months, the ringgit lost 50 percent of its Business Economics (BUSS 20003) - Fall -2020- CW (2) -All - QP value, falling to a low of MYR 4.57 ($1.10) to the dollar in January 1998. To prevent the currency from collapsing entirely, Malaysia's prime minister introduced strict capital controls and an MYR 3.80 ($0.92) peg to the dollar, which remained in place until 2005. By that point, though, the damage to the country's economic growth had been done. Prior to the crisis, between 1990 and 1996, Malaysia had an average GDP growth of 9.48 percent. By contrast, in 1998, Malaysia's GDP shrank by 7.4 percent - a far cry from previous gains. The burgeoning manufacturing industry shrank by nine percent, while the construction sector plummeted by 23.5 percent. The crisis also contributed to a loss of foreign investor confidence, which stemmed from the government's decision to permanently suspend international trading of Malaysia-listed shares, effectively trapping $4.47bn worth of shares in the country's fragile financial system. Along with productivity issues, Malaysia is also plagued by corruption, which is a key contributing factor in its entrapment at emerging economy level. In its latest Corruption Perceptions Index, Transparency International scored the country 47 points out of 100, with zero being highly corrupt. Comparatively, Taiwan scored 63, Hong Kong 76, and Singapore 85. In a 2017 survey by the same organization, 60 percent of Malaysian citizens said they believed the government was performing poorly in tackling corruption, while 23 percent said they had been forced to bribe a public official. In recent months, evidence has begun to emerge that Malaysia is taking action on the structural issues that are holding its economy back. According to current finance minister, Lim Guan Eng, the government has saved MYR 805m ($194m) since May 2018 by renegotiating infrastructure projects plagued by corruption - funds that can now be invested into new developments. The administration's perceived commitment to transparency and its desire to tackle fraudulent practices has also drawn in overseas investors: FDI has increased by 48 percent over the past 12 months. In a bid to boost competitiveness and the ease of doing business, the government brought in a new sales and service tax (SST) in September 2018 as a replacement for the now-defunct goods and services tax. The majority of essential consumer items, including fresh food, medicine, personal hygiene products and vehicles, are exempt from the SST, a move that will substantially bring down the cost of living for most Malaysians. This will leave them with more disposable income to spend, subsequently encouraging economic growth through an uplift in purchasing power. Similarly, businesses with an annual turnover of less than MYR 500,000 ($120,500) will not be liable to pay the SST, a move that is hoped to stimulate the start-up and SME sector. According to Lim, these various policies will facilitate Malaysia's entry to Asian Tiger status within the next three years. Okafor, meanwhile, is confident that the country is back on an upward curve, citing average GDP growth figures of 5.5 percent between 2010 and 2017. What's more, foreign direct investment hit a seven-year high in March, reaching MYR 21.73bn ($5.24bn). "If Malaysia remains on a strong growth trajectory for some time to come, it will certainly be a strong contender as one of the Asian Tigers," (World Finance 2019). Business Economics (BUSS 20003) - Fall -2020- CW (2) -All-QP Task 2: Answer ALL questions Question 1. Discuss any four macro-economic indicators with a detailed illustration from the case study. Highlight the key contributors' to a country's economic development and economic growth using Malaysia's case, highlighting the differences between the two aspects (30 marks) Question 2. Using illustrations from the case, highlight the possible benefits and challenges that faced Malaysia's Economic growth. ( 25 marks) Question 3. Explain any three benefits a country could gain from 'free trade' policy. Discuss any three reasons why countries choose to impose barriers to free trade with other countries. (25 marks)