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Are Government-Linked Corporations Crowding out Private Investment in Malaysia?

Author

Listed:
  • Jayant Menon

    (Asian Development Bank)

  • Thiam Hee Ng

    (Asian Development Bank)

Abstract

Private 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. To revive private investment in Malaysia, government must not only redress its growing fiscal deficit, but also expedite its program of divestment.

Suggested Citation

  • Jayant Menon & Thiam Hee Ng, 2013. "Are Government-Linked Corporations Crowding out Private Investment in Malaysia?," ADB Economics Working Paper Series 345, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0345
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    Cited by:

    1. Lim, Kian-Ping & Hooy, Chee-Wooi & Chang, Kwok-Boon & Brooks, Robert, 2016. "Foreign investors and stock price efficiency: Thresholds, underlying channels and investor heterogeneity," The North American Journal of Economics and Finance, Elsevier, vol. 36(C), pages 1-28.
    2. Cassey LEE & Yoshifumi FUKUNAGA, 2013. "Competition Policy Challenges of Single Market and Production Base," Working Papers DP-2013-17, Economic Research Institute for ASEAN and East Asia (ERIA).
    3. Khoo De Kai & Ismail Bin Abd Rahman, 2018. "The Impact of Financial Indicators towards Stock Returns of Finance Companies Listed on Bursa Malaysiae," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 8(3), pages 128-140, July.
    4. Jayant Menon, 2014. "Growth without private investment: what happened in Malaysia and can it be fixed?," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 19(2), pages 247-271, April.
    5. repec:gig:soaktu:v:33:y:2014:i:2:p:59-90 is not listed on IDEAS

    More about this item

    Keywords

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    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; 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, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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