Market, Government and Malaysia's New Economic Policy
Rajah Rasiah and Ishak Shari (2001) "Market, government and Malaysia's New Economic Policy", Cambridge Journal of Economics, 25(1): 57-78.
Posted: 3 Jul 2013
Date Written: 2001
Leading economic institutions such as the World Bank have argued that liberalization 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 stronge roles for government. The fast-growing Southeast Asian economies are still being used to demonstrate causation between liberalization, growth, poverty alleviation and redistribution. Using Malaysia as an example, this paper argues that growth, poverty alleviation and redistribution was achieved in the country through interventionist policies, as well as, market coordination. Throughout the New Economic Policy Period (1970-90) incentives were given to both the import-substitution and the export-oriented manufacturing sectors, 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.
Keywords: Market, government, new economic policy, Malaysia
JEL Classification: H3, H5, L5
Suggested Citation: Suggested Citation