Malaysian government gave their own definition. According to it, knowledge worker must “possess a university degree or diploma and have at least five years of professional experience in multimedia or IT”. Poon Wai Ching, The Malaysian economy. Second edition, Selangor, 2008, p.190.

Generally, the main capital of such kind of workers is knowledge and that is why they are able to perform sophisticated tasks that require combinations of ingenious and creative thinking.

Thus, in order to transform an economy into the Knowledge-based one, the abilities of human beings become crucial for the economic prosperity. That is why Malaysian government is paying more attention to the development and quality of the educational system.

Since 1957 the education system in Malaysia has made tremendous progress. At the time of independence, over half of the population had no formal schooling, while 6 per cent of Malaysian children had been educated to secondary level, and only 1 per cent to the post-secondary level. Department of statistics, Analisis tanaga buruh di Malaysia, Kuala-Lumpur, Malaysia, 2013, p.9, http://www.statistics.gov.my/portal/images/stories/files/LatestReleases/findings/RINGKASAN_PENEMUAN_PTB2011.pdf Six decades later, access to education has been transformed beyond recognition.

In 2013, Malaysia had achieved near universal enrolment at the primary level at 95 per cent or 2,708,988 students. Maklumat Asas Pendidikan, Portal System Maklumat Pengurusan Pendidikan, Bilangan Murid, http://emisportal.moe.gov.my/, (Accessed 28.02.2014). At the same time the percentage of pupils who dropped out of primary school had been dramatically reduced (from 3 per cent in 1989 to just 0.2 per cent in 2013). According to the Malaysian statistics, enrolment rates at the secondary level from 2006 to 2013 remained almost stable, being around 66-68 per cent for this period of time. However, international statistics showing the increasing trend in the level of secondary enrollment, give slightly different figures. Thus, according to the UNESCO in 2011 (the latest year of the published researches) only 80 per cent of children were enrolled to the secondary level in Malaysia. UNESCO Institute of Statistics, Education (All levels) profile Malaysia, http://stats.uis.unesco.org/unesco/TableViewer/document.aspx?ReportId=289&IF_Language=eng&BR_Country=4580 Further, the proportion of the adult population aged above 15 with no school education has decreased from 60 per cent in 1950s before the independence to less than 10 per cent in 2012.

The greatest improvement was undoubtedly at tertiary education level, which is crucial for the development of Knowledge-based Economy. The enrolment rates had almost doubled, from 29 per cent in the 1990s, to 43 per cent in 2011 Ibid. and to 45 in 2013 (Diagram № 5).Maklumat Asas Pendidikan, Portal System Maklumat Pengurusan Pendidikan, Bilangan Murid, http://emisportal.moe.gov.my/, 28.02.2014. Malaysian enrollment to tertiary education can be compared with middle-income countries as Peru (43 per cent), Macedonia (41 per cent) and Kazakhstan (42 per cent), The World Bank, World Development Indicators, http://data.worldbank.org/indicator/SE.TER.ENRR, 20.04.2014. which shows that there is still a space for the further improvements.

Overall, while access to basic education is strong, it can be seen that primary education enrolment during the last 5 years has not continued to grow, in contrast with the most developed countries in the Asian region such as South Korea and Japan which have participation rates around 100 per cent. There should also be noted that rates in secondary education, while showing a big improvement from several past decades, remain lower than that in some neighboring countries like Thailand and South Korea, where enrolment exceeds 87 and 97 per cent respectively in 2012. World Bank, World Development Indicators, http://data.worldbank.org/indicator/SE.SEC.ENRR, 20.04.2014 That is mean that more efforts should be made to enroll the 3-5 per cent of children from rural areas which still have limited access to educational facilities. As for tertiary education, Malaysia also needs to encourage it further. For example, in South Korea the enrollment in tertiary education in 2012 accounts for 103 per cent, which means that some individuals have two or even three university degrees. World Bank, World Development Indicators, http://data.worldbank.org/indicator/SE.TER.ENRR

Diagram № 5

Gross enrollment ratio in Malaysia, % (1999, 2006-2013)*

*Compiled by the author from Maklumat Asas Pendidikan, Portal System Maklumat Pengurusan Pendidikan, Bilangan Murid, http://emisportal.moe.gov.my (Accessed 17.03.2014)

In addition, there has been a rapid expansion in preschool education. Around 77 per cent of children are enrolled in 2013 in some form of preschool education (either public or private). Ibid.

Although Malaysia still didn't achieved the level of industrial countries and enrollment rates are still lower than that of high-performing education systems like Singapore and South Korea, the speed of improvement is very high.

The implementation of a new policy aiming at the improvement of the quality of the labor force, brought the increase in the number of the employed persons. For example, in 2013 the labor force participation rate increased to 65.6 per cent compared to 63 per cent in 2006. Department of Statistics of Malaysia, Analysis of Labor Force in Malaysia 2006-2007, Malaysia, Kuala-Lumpur, p.17, http://statistics.gov.my/portal/download_Labour/files/BPTMS/finding_report_LFS_english.pdf The increase of 2.6 percentage point was also attributed by the growth of scale of labor market from 10.62 million in 2006 to 13.2 million persons in 2013. Along with the increase in labor force, the number of unemployed persons also rose by 45,000 from 2006 to 398,600 persons in 2013. However, the overall unemployment rate has reduced by 0.3 per cent from 3.3 in 2006 to 3.0 per cent in 2013. Department perangkaan Malaysia, Siaran Bulanan Perangkaan Tenaga Buruh, Malaysia, 2013, p.2,

http://www.statistics.gov.my/portal/images/stories/files/LatestReleases/employment/Labour_Force_Indicator_Malaysia_Feb_2013BI.pdf More than half of the total unemployed persons in Malaysia consisted of those with secondary education. Nevertheless, the percentage decreased by 3.6 percentage point to 56.3 per cent in 2012 compared to 59.9 per cent in 2011. In contrast, the percentage of unemployed persons with tertiary education rose significantly by 4.5 percentage point to 29.8 per cent in 2012 as compared to 25.3 per cent in the previous year.

At the same period of time both the percentage of the employed persons with secondary and tertiary education increased respectively by 0.4 and 0.9 percentage point to 55.4 and 24.3 per cent. On the contrary, the number of the employed persons with primary education and no formal education has decreased by 0.8 and 0.6 percentage point to 17.1 and 3.1 per cent in 2013. It is important to mention, that about 57.7 per cent of the employed persons comprised those aged 25-44 years. Bank of Malaysia, http://www.statistics.gov.my/portal/download_Labour/files/BPTMS/finding_report_LFS_english.pdf

The distribution by sex also showed that more than half of the employed males and females were in the age group 25-44 years, accounting for 56.5 and 59.5 per cent respectively in 2013. Ibid.

Analyzing the employed persons by occupation, service and sales workers categories were the most popular in terms of employment, which were accounting for 2.50 million persons (20.3 per cent) in 2012, which was the last year of the statistics given. It was followed by plant and machine-operators and assemblers category, amounting to 1.55 million persons (12.7 per cent). There were two categories in Malaysia which recorded the lowest number of employed persons in 2012 that were managers, accounting for 0.70 million persons (5.7 per cent) and skilled agricultural, forestry and fishery workers, being 1.01 million persons (8.2 per cent). In 2012 there was recorded the growth of services sector in terms of employment. Some services subsectors registered an increase of over 100,000 employed persons, namely wholesale and retail trade as well as repair of motor vehicles and motorcycles (111,700 persons) and human health and social work activities (102,500 persons). In the meantime, employment in the public administration and defense along with compulsory social security activities recorded the major decrease by 38,700 persons to 0.75 million persons. In addition, in 2012 employment in the manufacturing sector increased by 113,800 persons to 2.22 million as compared to 2.11 million persons in 2011. This sector was followed by the construction, which increased by 50,900 persons to 1.13 million persons. However, the agriculture, forestry and fishing sector recorded a decline of employed persons by 204,900 persons to 1.41 million as compared to 1.61 million persons in the previous year (Diagram 6).

Diagram № 6

Number of employed persons by occupation in 2012 in Malaysia (`000)*

*Source: Bank of Malaysia, Analysis of Labor Force, Kuala-Lumpur, Malaysia, p.12, http://www.statistics.gov.my/portal/download_Labour/files/BPTMS/finding_report_LFS_english.pdf.

Although the results of the governmental policy is evident, Malaysian government still cannot decide all problems. For example, the gap between rural and urban areas is still evident and the unemployment rates proves it. Thus, this indicator in rural areas was higher than in urban areas, recording 3.5 per cent in 2012.

Although in Malaysia the labor force participation rate is increased, the country still has a lack of scientific and technical manpower. Thus, enrolment in science accounted only for 31 per cent from the total enrolment in 1999 in 2012 the percentage of the enrolment dropped till 20 per cent. This was largely due to the lower number of science stream students at the secondary school level, comprising 25.7 per cent of the total number of students in 1998 and less than 18 per cent in 2012, which was below the targeted 60:40 science to arts ratio. Development of education, National Report Malaysia 2012, p. 14 from

http://www.ibe.unesco.org/International/ICE/natrap/Malaysia.pdf

Another indicator showing the disparity of jobs distributing and employment is the number of men and women employed. Overall, over 60 per cent of the total unemployed persons in Malaysia were males with a ratio of about two males for every female. This trend is explained by the fact that Malaysia is a Muslim country and it is accepted that women should see to the house instead of working in the office. At the same time the unemployment rate for male was lower than female.

One more major problem for the development of the skilled labor force in Malaysia is the inequality among three different ethnic groups, to be more precise among Malay or Bumiputra (special term to describe Malay race), Chinese and Indians. As it was mentioned above, the labor force participation rate in 2013 registered an increase to 65.6 per cent for Malaysian citizens, in contrast to the same indicator for non-Malaysian citizens which declined by 0.1 percentage point from 2011 to 80.7 per cent in 2013. Analyzing the three main ethnic groups in Malaysia, the Chinese manpower was ahead of other communities in terms of labor force participation, which accounted for 64.7 per cent in 2013, rising by 1.6 point from 63.1 per cent in the previous year. Labor force participation rate for the Malays and the Indians also slightly increased in 2013 by 0.6 and 1.1 percentage points to 61.5 and 60.6 per cent respectively.

Overall, in terms of employment, the Bumiputera remained dominant with a share in percentage by 55.7 per cent, followed by the Chinese (23.3 per cent) and the Indians (6.5 per cent) in 2013.

Malaysian and international statistics also highlights the most important indicators of the condition and quality of life and provides an opportunity to compare them with the situation in other emerging and economically developed countries. The most important social indicators are Gross Domestic Product (GDP) per capita, life expectancy and literacy rates. Based on them, the approximate index of human development can be calculated, which to a certain extent reflects the situation in the country in relation to the most developed and prosperous country in socio-economic terms, which is now the United States.

According to the latest data of the World Bank, in 2012 the GDP per capita was 16,919 U.S. dollar in purchasing power parity,The World Bank, World Development Indicators, http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD, (Accessed 22.04.2014). the level of literacy of the population older than 15 years was 98 per cent, the average life expectancy was 74,5 years. From these data, the human development index for Malaysia in 2012 is defined as 0.769.United Nations Development Programme, Human Development Index and its components, https://data.undp.org/dataset/Table-1-Human-Development-Index-and-its-components/wxub-qc5k, (Accessed 22.04.2014). Thanks to social reforms and improvement in the quality of education, the index rose by 0.210 units from 0.559 in 1980. By this indicator, the country ranks 65 in the world out of 195 analyzed countries. Malaysia is ahead of its neighbors, such as Thailand, Indonesia and Vietnam, which occupy 103, 121 and 127 positions. Ibid. The improvement in the Human Development Index reflects positive trends in amelioration of the quality of human resources. The significant improvement in access to education has beneficial results. Adult literacy has increased even more dramatically than the youth one, from less than 70 per cent to over 93 per cent in the same period of time.

Although shoving the improvement in the education system, the indicators such as high literacy and enrollment rates do not reflect the innovativeness of the economy because they do not show the quality of education. In order to analyze deeper the qualitative aspect of education and the implementation of new technologies there should be used such as factors as the availability of labor in science and technology as well as the amount of investments in this sphere. Overall, the level of capitals directed in R&D is determined by the volume of research. That is why the small supply of researchers may reflect weak demand for R&D spending. Unfortunately, Malaysia is still behind developed countries in terms of the number of researchers and engineers in R&D and the amount of investment in this sphere. (Table 2).

Table № 2

Research and development indicators in different countries, 2011*

*Source: United Nations Development Programme, Human Development Report 2013, NY, USA, p. 186, http://hdr.undp.org/sites/default/files/reports/14/hdr2013_en_complete.pdf and The World Bank, World Development Indicators, http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD, 22.04.2014.

From this table it is seen that except for Singapore, Malaysia is a second leading country in South East Asia which is directing sufficient capital on the development of science and technology. However, comparing these figures with other developed nations, the amount of Malaysian investments and the number of researchers per million people are significantly lower. Moreover, it should be counted that the scale of Malaysian GDP is less that the same indicator in Japan or United States, consequently the amount of investments directed to R&D is smaller. Therefore, the government should provide more active research and development to enhance the progress of the innovative society.

Another indicator that is closely linked to the implementation of the Knowledge-based Economy is computer literacy, which in Malaysia in the recent years have dramatically increased. Thus, computer literacy rate for Malaysians at the age from 5 to 69 years reached approximately 45 per cent in every state in 2012. However, this indicator demonstrates the uneven development of urban and rural areas. Namely, the percentage of computer literate citizens in the cities was 68.6 per cent in 2012, while in villages the figures were much lower, being 42.1 per cent, showing an urban-rural gap of 26.5 per cent.

The number of the Internet subscribers is also showing the positive trend and the trend of acquiring of Internet technologies. The number of subscribers in Malaysia increased dramatically over a short period of time. Thus, in 2004 the number of subscribers was only 2.9 million, while in 2006 it was around 4.9 million. According to the Economic Report 2013/2014, it is expected that there should be more that 25 million users by 2015, which is by 23 per cent higher than in 2012, when there were only 18 million subscribers. Newspaper "New Straight Times", Malaysia Internet Subscribers Keep Growing, issue from 09.02.2014, http://www.nst.com.my/latest/font-color-red-2014-budget-font-25-mill-internet-users-by-2015-1.384975

The spreading of the Internet and increase of the activity of citizens on-line are influencing on the enlargement of the On-line trade. From 2010 to 2013 Malaysia's online shopping market rose from RM 1.8 billion to RM 5 billion. According to the statistics, Malaysia is among the top three countries in Asia by the amount spent in the Internet over the past 12 months. Moreover, Malaysians were increasingly spending more time on the Internet. Thus, the penetration rate of social networks is 91 per cent, while approximately around 11.8 million Malaysians have Facebook accounts.

The increase in the number of Internet subscribers is influenced by the adoption of broadband Internet and wireless technology. Overall, in 2011 Malaysia's broadband penetration rate reached 55.6 per cent surpassing the national target of 50 per cent. Furthermore, in 2013 this indicator reached 67 per cent. Ministry of Science, Technology and Innovation in Malaysia, Broadband penetration rate by state, (Accessed 20.04.2014), http://nitc.mosti.gov.my/nitc_beta/index.php/ict-indicator/broadband-penetration-rates-by-state.

The growth of the Internet penetration rate provided opportunities for developing retail industry and increase online presence of Malaysian business, which influences on the enlargement of Malaysian activity in the global market and allow to sell more products in Malaysia and abroad.

Considering all stated above, the promotion and training of the qualified manpower which is able to develop the new products and services essential for building the Knowledge-based Economy. The new opportunities should be created through academic research centers and institutions. The direct results of the work of these institutions are in patents, licenses and royalties. Among Asian countries, South Korea and Japan have been granted the highest amount of patents to their citizens, namely in 2012 they were given 148,136 and 287,013 patents respectively. Malaysia still have a room for improvement of its results. Thus, in 2012 Malaysia had granted only 1,114 patents for its residents, while 5,862 patents have been given to nonresidents. This result is higher than in the most The World Bank, World Development Indicators, http://data.worldbank.org/indicator/IP.PAT.RESD (Accessed 12.05.2014) neighboring countries, however, it is still considerably lower than the indicator for the industrial countries.

The improvement in the education system was achieved because Malaysian government increased significantly their investment to education. In 1996 which was the year of MSC launching, public expenditure per student in tertiary education as a percentage of GDP per capita increased dramatically, reaching 118 per cent. Report Developing Malaysia into a knowledge-based, Ministry of Education Malaysia, Selangor, 2000, p. 126, http://nitc.mosti.gov.my/nitc_beta/images/stories/ictpolicies/3rd_opp_cont_chap5.pdf With a gradual implementation of the governmental strategy, the level of public expenditure on the tertiary education decreased. In 2012 it is amounted to 60 per cent of GDP per capita.

Along with tertiary education, Malaysian government directed capitals in all levels as investments in the education system provides institutions not only with new technologies and sufficient materials, but also enable teachers and principals to focus on delivering effective teaching and learning. That is why the level of investments in Malaysia is constantly growing. For example, in 1980 the Malaysian government's spending on primary and secondary education as a percentage of GDP was the highest in South-East Asia. In 2011, the amount spent was 5.9 per cent of GDP or 20 per cent of total government spending, which was higher than investments in this sphere of the members of the Organization for Economic Co-operation and Development where the average percentage amounted to 3.4 per cent of GDP and 8.7 per cent of total public spending respectively. Development of education, National Report Malaysia 2012, p.12

http://www.ibe.unesco.org/International/ICE/natrap/Malaysia.pdf.

In 2014 the Malaysian total education budget accounted for 15.6 billion US dollars because the government has continued to direct the largest proportion of investment, to be more precise 21 per cent, to the educational fields. Newspaper MalayMailOnline, Budget 2014: Education sector receives biggest allocation, issue from 25.10.2013,

http://www.themalaymailonline.com/malaysia/article/budget-2014-education-sector-receives-biggest-allocation. This demonstrates the real commitment of the government to develop education as a national priority.

Table № 3

Public expenditure in education and tertiary education enrollment in selected countries in 2012 (%)*

*Source: The Word Bank, World Development Indicators, http://data.worldbank.org/indicator/SE.TER.ENRR, (Accessed 18.03.2013).

In terms of the development of education system and skilled labor force, special legal base was introduces by the Malaysian government. Recent legislations on education are The Education Act 1996, The Private Higher Educational Institutions Act 1996, National Council on Higher Education Act 1996, National Accreditation Board Act 1996, Universities and University Colleges (Amendment) Act 1996 and National Higher Education Fund Board Act 1997.

Among these documents, the Education Act 1996 is the most important one. This law repealed the Education Act of 1961. It covers all levels of education under the national education system (except international schools) and stipulates the use of the national language as the main medium of instruction, a national curriculum, and the rules public examinations. Overall, the Act aims to ensure relevance and quality of the education system.

In addition, Malaysian Labor Law prohibits the establishment of trade unions in some export sectors, such as electronics and electrical engineering. This is another attractive factor for foreign business, as these government measures prevent the occurrence of strikes and labor unrest.

The authorities in Malaysia are taking measures to improve further the quality of the labor force. In 1993, there was established the Fund of development of human resources, which provides grants to companies and helps them to cover the costs of training staff and workers.

Widespread use of English is also a competitive advantage for Malaysia, compared to the neighboring countries. This fact makes easier the process of doing business and communications with foreign partners.

Thus, the various authorities' efforts for training more skilled and disciplined personnel, contribute to the development of Knowledge-based Economy in Malaysia.

Overall, for decades, one of the major factors that make this country attractive for foreign capital investments and business was cheap labor force. However, due to the rapid development of the manufacturing sector and reasonable development of education system, Malaysia has ceased to be a country with an excess supply of unskilled and cheap manpower. Therefore, today it is becoming more evident that the new competitive advantage of Malaysia, by contrast, is gradually becoming an educated population with diverse skills and knowledge. Although the number of indicators show the considerable improvements in the sphere of labor training and implementation of new technologies into the production process as well as in building the modern infrastructure and environment, the analysis of the indicators suggest that Malaysia is still in process of the transformation of its economy into the Knowledge-based one which is essential to become the developed nation by the year 2020.

4. Current characteristics of the Malaysian economy and future challenges identification. Comparison with Russian case

4.1 The current trend in the development of Malaysian economy and future prospects

Malaysia achieved spectacular performance from the year of independence in 1957 to 2014, becoming an upper-middle income country with an open economy, which is closely linked with international trade. Undertaking different measures on the way of overcoming of its backwardness, Malaysia demonstrates high rates of economic growth and succeeded to improve various socio-economic indicators. Thus, in the period from 1985 to 1995 the economy of the country grew on average 7.3 per cent. Estimated by the author, data from World Bank, World Development Indicators, http://data.worldbank.org/indicator/NY.GDP.MKTP.CD, 25.04.2014. After the sharp decline during the Asian financial crisis in 1997-1998, the Malaysian economy continued to growth on average 5.5 per cent during 2000 - 2008.Ibid. In 2013 the economy of this country was the 3rd largest economy in Southeast Asia after the two Southeast Asian countries - Thailand and Indonesia which have higher population, World Bank, World Development Indicators, http://data.worldbank.org/indicator/NY.GDP.MKTP.CD, 25.04.2014. and 29th largest economy in the world with gross domestic product for 2012 amounted to 305 billion US dollars and GDP per capita in current U.S. dollars accounted for 10,432 US dollars. Ibid.

The speed of development was supported by considerable reduction of poverty from 49.3 percent of households living below the national poverty line in 1970, which is currently defined as 8.50 US dollars per day, to 1.7 percent in 2012.Malaysian Economic Planning Unit, Economic Report 2013/2014, p.21, Kuala-Lumpur, http://www.treasury.gov.my/pdf/economy/er/1314/chapter1.pdf However, till today Malaysia is still eliminating disparity among urban and rural areas and among different ethnic groups. For instance, the Gini coefficient of income inequality is accounted for 0.43 in Malaysia in 2012, compared with 0.31 and 0.34 in the Rep. of Korea and Japan respectively.World Bank, World Development Indicators, http://www.worldbank.org/en/country/malaysia/overview, 25.04.2014.

Historically, the Malaysian state has always been playing a significant role in directing economic development of the country through the implementation of short and long-term macroeconomic plans and policies. In 1996 there was proclaimed the national transformation strategy, called Vision 2020 which is aimed to transform Malaysia into a high-income developed country by the year 2020. Governmental policies are also aimed to make the domestic demand, in particular private investment and consumption, the main driver of the economic development and consequently to reduce the influence of international economic environment on the internal economic situation in Malaysia. The undertaken measures of the government brought good results. For example, in 2013 there was observed the increase in domestic spending, that was generated by 4.8 per cent growth in employment, and low unemployment rate of 3.1 per cent. At the same time, taking into account the continuation of different national programmes, Malaysian government spending rose by 6.3 per cent in 2013.The reasonable policy of the country led to the achievement of the more diversified structure of export and to the increase of the amount of intra-regional trade. With more balanced economic structure and despite the tense global environment along with the decreasing external demand, Malaysia has achieved a steady economic growth of 4.7 per cent in 2013.Malaysian Economic Planning Unit, Economic Report 2013/2014, p.21, Kuala-Lumpur, http://www.treasury.gov.my/pdf/economy/er/1314/chapter1.pdf

Speaking about the structure of Malaysian gross domestic product and the rates of growth of different sectors, the services continued to lead, contributing for 49.3 percent of the GDP an increasing by 5.9 per cent in 2013. The fast development of the service industry is a part of the governmental strategy, aiming to develop new growth areas and broaden economic outlook. The main sectors that are growing fast in Malaysia are communication technologies, business services, wholesale and retail trade, finance and insurance, electronics and electrical engineering, biotechnology, production of medical devices, machinery and equipment.

At the same time the manufacturing sector grew only by 3.4 per cent in 2013. It was much lower than in 2012 when the same indicator accounted for 41.6 per cent.Official Portal of the Department of Statistics of Malaysia, Malaysian Economic Indicators 2013, p.17, Kuala-Lumpur, Malaysia,

http://www.statistics.gov.my/portal/index.php?option=com_content&view=category&id=93%3Amalaysia-economic-indicators-&Itemid=153&layout=default&lang=en. This fall might be explained by the finalization of the construction of major projects, including the Second Penang Bridge, Sabah-Sarawak gas pipeline, and Sabah oil and gas terminal. Overall, in 2013 industry accounted for 41.6 per cent of Malaysia's GDP.

Malaysia's agriculture industry contributed for 9.1 per cent of GDP in 2013, while the growth of this sector was around 2.1 per cent with the straightening of palm oil and rubber production. Ibid.

Speaking about financial situation, the inflation rose to 2.1 per cent in 2013, compared to 1.7 per cent in 2012 which was caused by the increase of prices on food and reduction of subsidies for fuel. World Bank, World Development Indicators, http://data.worldbank.org/indicator/FP.CPI.TOTL.ZG, (Accessed 10.05.2014).Another factor was a weaker Malaysian ringgit, which depreciated by 6.6 per cent against the US dollar over 2013. Malaysian Economic Planning Unit, Economic Report 2013/2014, p.19, Kuala-Lumpur, http://www.treasury.gov.my/pdf/economy/er/1314/chapter1.pdf

The fall in external demand had a deep impact on Malaysia's trade accounts. Merchandise exports decreased by 3.6 per cent to 219.4 billion US dollars in 2013, reflecting reduced volumes and price for palm oil, rubber and electronics. At the same growth in domestic demand influenced to the decline in imports, being 186.8 billion US dollars in 2013. This situation led to the fall of the trade surplus by 19.8 per cent to 32.6 billion US dollar which is the smallest in 9 years. Despite the tense global economic situation, Malaysia have fiscal deficit of 4 per cent of GDP, which remains stable form 2008 to 2013.

Global development of economic system influenced the decreasing of capital outflows from the country. Malaysian direct investment abroad accounted to 2.9 billion US dollars in 2013, which was less than in 2010-2012. Portfolio investment also decreased, while foreign direct investment rose to 11.6 billion US dollars. Malaysian Economic Planning Unit, Economic Report 2013/2014, p.21, Kuala-Lumpur, http://www.treasury.gov.my/pdf/economy/er/1314/chapter1.pdf

The measures of Malaysia on the way of transformation of the economic system have been well recognized by international organizations. Malaysia is standing on the 12th position in the World Bank's Doing Business report 2013, which is higher by six positions than last year. According to the Global competitiveness report 2013-2014, Malaysia is the second most competitive nation among the Association of Southeast Asian nations and the 7th among twenty-five countries from Asia-Pacific region. It also acknowledged, that Malaysia is among top 30 most competitive economies, being at 24th position out of 148 countries. The highest achievements mentioned are developed financial market, business-friendly institutional framework, business sophistication, and gradual implementation of innovations. On the level of modern technologies which are one of the twelve indicators of the global competitiveness index, Malaysia is on 25th position.

Improvements on the sphere of innovations are measured by the Global Innovation Index. This indicator ranked Malaysia at the 32 level out of 142 countries in 2012 and 2013. This index includes 84 indicators, among which are the quality of top universities, availability of finance, venture capital and innovation capabilities. The report highlighted Malaysian advantages in market and business sophistication, although there should be improved the quality of human capital and domestic research. Despite some drawbacks, Malaysia was included in the group of the most progressive states among the upper middle-income countries in terms of implementation of innovation.

Despite the deterioration of some indicators, economic situation of Malaysia is favorable, which is confirmed by the balance of payments remaining in surplus, and international reserves accounting for 134.6 billion US dollars in 2013, which cover for 7 months of goods and services imports.

With the implementation of various socio-economic policies, Malaysia is entering into a new phase of development towards the realization of its goal of becoming a developed nation with innovative economy. The economic indicators given above show that despite proclamation of different governmental initiatives, Malaysia still needs to enhance competitiveness of the country, develop more innovation-driven enterprises as well as raise national productivity and efficiency.

Taking into the consideration the efforts of the government and the current trend of the development of global economic system, Malaysia should ameliorate its indicators in the following years. Namely, the analyzed country is dependent on global trade, with exports of goods and services being around 83 per cent of GDP in 2013.Malaysian Economic Planning Unit, Economic Report 2013/2014, p.25, Kuala-Lumpur, http://www.treasury.gov.my/pdf/economy/er/1314/chapter1.pdf The forecasted improvement in the global economic situation and in the increase in amount of global trade will influence on the expansion of the Malaysian trade operations. Also, recovery in exports will attract more investment in export-oriented manufacturing.Asian Development Bank, Malaysia: The country's profile 2014, p.2,

http://www.adb.org/sites/default/files/ado2014-malaysia.pdf. At the same time, it is predicted that the inflation growth will slow the domestic demand. Taking these factors into account, GDP is forecasted to grow by 5.0 per cent in 2015.Malaysian Economic Planning Unit, Economic Report 2013/2014, p.27, Kuala-Lumpur,

http://www.treasury.gov.my/pdf/economy/er/1314/chapter1.pdf

The success in the transformation of Malaysia into the Knowledge-based Economy is partly dependent on the investment activity. That is why Malaysia is promoting domestic investment and intensifying growth of small and medium enterprises at the same time improving different types of infrastructure.

As it was mentioned in the previous chapter, education plays a key role in the development of human capital and in the creation of skilled labor force, which is capable to meet the need of rapidly challenging environment and raise the competitiveness of the country. In this regard, the country should put the greater emphasis on building professional human capital.

It should also be mentioned that R&D and implementation of innovations are crucial to accelerate the growth of the economy. For increasing the rate of innovations in GDP, the investments directed in this sphere must continue to increase. For example in 2011, Malaysia's expenditure on research and development in GDP accounted only for 1.1 per cent, which is less that in developed countries like Singapore where investments are 2.09 per cent. Although the amount of capitals directed in this sphere is constantly growing, the efficiency of investments and the connection between business enterprises and research institutions should be raised in order to organize an uninterrupted chain of development. For example, RM 600 million (181.8 million U.S. dollars) was allocated to five biggest research universities to support investigation in strategic fields such as nanotechnology, automotive technology, biotechnology and aerospace. At the same time, RM 37 million (11.2 million U.S. dollars) were directed to Agency of Innovation of Malaysia for different activities such as the Genovasi programme (the Programme of the Implementation of Innovations), Ambassador Development programme, Innovation and Business opportunities programme, etc.

For the further growth there should be created new research and testing centers, while the production of high-tech products with relevant demand in the global market such as wafers, silicon and solar cells should be increased. That is why the government should support the programmes of the creation and implementation of innovations. In the author's opinion, Malaysia should also pay attention to the development of intellectual property rights system a source of new wealth creation.

All in all, despite the fact that Malaysia is slightly behind the leading industrial countries, after the obtaining the independence this country has succeeded to achieved impressive results in its socio-economic development. The performance of Malaysian economic system reflects the focus of the country on the result and the growing effectiveness of governmental policy to implement an innovation culture among all Malaysian.

4.2 The comparison of Malaysian case with the Russian one