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Market, Government and Malaysia's New Economic Policy

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  • Rasiah, Rajah
  • Shari, Ishak

Abstract

Leading economic institutions such as the World Bank have argued that liberalisation holds the key to growth, poverty alleviation and redistribution. Even recent efforts to model increasing returns within the framework of new growth theories have not resulted in prescriptions for stronger roles for governments. The fast-growing Southeast Asian economies are still being used to demonstrate causation between liberalisation, and growth, poverty alleviation and redistribution. Using Malaysia as an example, this paper argues that growth, poverty alleviation and redistribution in the country was achieved under circumstances of both interventionist policies as well as market coordination. Throughout the New Economic Policy (NEP) period (1970-90), strong incentives were offered to both the import-substitution and export-oriented manufacturing sectors, and the state made strong forays into the market to redress poverty and inequality. The paper also argues that poorly coordinated government intervention generated substantial unproductive rent seeking. Copyright 2001 by Oxford University Press.

Suggested Citation

  • Rasiah, Rajah & Shari, Ishak, 2001. "Market, Government and Malaysia's New Economic Policy," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 25(1), pages 57-78, January.
    • Handle: RePEc:oup:cambje:v:25:y:2001:i:1:p:57-78
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    Citations

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    Cited by:

    1. Kaznacheev, Peter, 2013. "Resource Rents and Economic Growth," Published Papers kazn01, Russian Presidential Academy of National Economy and Public Administration.
    2. Rajah Rasiah & Johannes Dragsbaek Schmidt, 2010. "Introduction," Chapters, in: Rajah Rasiah & Johannes Dragsbaek Schmidt (ed.), The New Political Economy of Southeast Asia, chapter 1, Edward Elgar Publishing.
    3. M Niaz Asadullah & Norma Mansor & Antonio Savoia, 2019. "Explaining a ‘development miracle’: poverty reduction and human development in Malaysia since the 1970s," Global Development Institute Working Paper Series 382019, GDI, The University of Manchester.
    4. Michael T. Rock, 2015. "Southeast Asia’s Democratic Developmental States and Economic Growth," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 7(1), pages 23-51, April.
    5. Graham Brown, 2005. "Horizontal Inequalities, Ethnic Separatism, and Violent Conflict: The Case of Aceh, Indonesia," Human Development Occasional Papers (1992-2007) HDOCPA-2005-28, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    6. Tan, Jeff, 2012. "The Pitfalls of Water Privatization: Failure and Reform in Malaysia," World Development, Elsevier, vol. 40(12), pages 2552-2563.
    7. Gachino, Geoffrey, 2006. "Foreign Direct Investment, Firm-Level Capabilities and Human Capital Development: Evidence from Kenyan Manufacturing Industry," MERIT Working Papers 2006-014, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Kaznacheev, Peter, 2013. "Resource Rents and Economic Growth: Economic and institutional development in countries with a high share of income from the sale of natural resources. Analysis and recommendations based on internatio," EconStor Research Reports 121950, ZBW - Leibniz Information Centre for Economics.
    9. Leo van Grunsven, 2006. "New Industries in Southeast Asia’s Late Industrialization: Evolution versus Creation - The Automation Industry in Penang (Malaysia) considered," Papers in Evolutionary Economic Geography (PEEG) 0611, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Dec 2006.
    10. Rajah Rasiah & Jebamalai Vinanchiarachi & Padmanand Vadakkepat, 2014. "Catching-Up from Way Behind: How Timor-Leste Can Avoid the Dutch Disease?," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 6(1), pages 119-148, April.
    11. Kalim Siddiqui, 2015. "Economic Policy – State Versus Market Controversy," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 10(1), pages 9-32, March.
    12. Rajah Rasiah, 2010. "Industrialization in the Second-tier NIEs," Chapters, in: Rajah Rasiah & Johannes Dragsbaek Schmidt (ed.), The New Political Economy of Southeast Asia, chapter 2, Edward Elgar Publishing.
    13. Nor Farizal Mohammed & Zuraidah Mohd Sanusi & Fahdah Sultan Alsudairi, 2017. "Corporate Governance and Malaysian Politics: Theoretical Framework for Accounting Quality," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 188-195.
    14. Syn, Tan Wooi, 2002. "Privatisation and Capital Accumulation in Malaysia," Centre on Regulation and Competition (CRC) Working papers 30678, University of Manchester, Institute for Development Policy and Management (IDPM).
    15. Kozo Otsuka & Kaoru Natsuda, 2016. "The Determinants Of Total Factor Productivity In The Malaysian Automotive Industry: Are Government Policies Upgrading Technological Capacity?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-18, September.
    16. Rajah Rasiah & Nik Rosnah Wan Abdullah & Makmor Tumin, 2011. "Markets and Healthcare Services in Malaysia: Critical Issues," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 3(3), pages 467-486, October.
    17. Effiezal Aswadi Abdul Wahab & Mazlina Mat Zain & Kieran James & Hasnah Haron, 2009. "Institutional investors, political connection and audit quality in Malaysia," Accounting Research Journal, Emerald Group Publishing Limited, vol. 22(2), pages 167-195, September.
    18. Renuka Mahadevan, 2007. "The poverty transition: when, how and what next?," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(8), pages 1099-1113.
    19. Bethuel Kinyanjui Kinuthia, 2009. "Industrialization in Malaysia: Changing role of Government and Foreign Firms," DEGIT Conference Papers c014_049, DEGIT, Dynamics, Economic Growth, and International Trade.

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