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Politics and Economic Reform in Malaysia

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  • Bryan K. Ritchie

Abstract

Malaysia???s admirable economic growth is often attributed to liberal, open economic policies. Aggregate measures of openness, however, often veil the way coalitional politics drove illiberal government intervention in the economy to correct ethnically based economic inequality, create national heavy industries, and favor politically well-connected entrepreneurs. A more nuanced analysis reveals a complex mix of liberal and illiberal economic policies designed to balance competing coalitional interests. These policies created a ???dual economy??? that successfully replaced growing political and social instability with rapid economic growth sufficient to support redistributive politics. Yet this same dual economy also slowed further reform and retarded technological development, leaving Malaysia mired in mediocrity: neither price competitive with China nor technologically competitive with Singapore, the East Asian NICs, or the OECD countries.

Suggested Citation

  • Bryan K. Ritchie, 2004. "Politics and Economic Reform in Malaysia," William Davidson Institute Working Papers Series 2004-655, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2004-655
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    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/40041/3/wp655.pdf
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    References listed on IDEAS

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    Cited by:

    1. 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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    More about this item

    Keywords

    Malaysia; Economic Reform; Technological Upgrading; Coalitions; Dualism;
    All these keywords.

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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