Are Government-Linked Corporations Crowding out Private Investment in Malaysia?
AbstractPrivate investment in Malaysia has been sluggish since the Asian financial crisis. One explanation is that the growing presence of government-linked corporations(GLCs) has been crowding out private investment. For the first time, we provide empirical evidence on the relationship between GLC presence and private investment. We find that when GLCs are dominant in an industry, investment by private firms is significantly negatively impacted. Conversely, when GLCs do not dominate an industry, the impact on private investment is not seen. Sensitivity tests associated with varying the level of the threshold used to determine dominance confirm the robustness of the results. To revive private investment in Malaysia, government must not only redress its growing fiscal deficit, but also expedite its program of divestment.
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Bibliographic InfoPaper provided by The Australian National University, Arndt-Corden Department of Economics in its series Departmental Working Papers with number 2013-03.
Length: 32 pages
Date of creation: 2013
Date of revision:
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More information through EDIRC
Malaysia; private investment; government-linked corporations(GLCs); crowding-out;
Other versions of this item:
- Menon , Jayant & Ng, Thiam Hee, 2013. "Are Government-Linked Corporations Crowding out Private Investment in Malaysia?," ADB Economics Working Paper Series 345, Asian Development Bank.
- E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- F20 - International Economics - - International Factor Movements and International Business - - - General
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-27 (All new papers)
- NEP-MAC-2013-04-27 (Macroeconomics)
- NEP-SEA-2013-04-27 (South East Asia)
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- R. Glenn Hubbard, 1997.
"Capital-Market Imperfections and Investment,"
NBER Working Papers
5996, National Bureau of Economic Research, Inc.
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