Coalitional politics, economic reform, and technological upgrading in Malaysia

Many attribute Malaysia's admirable economic growth to liberal economic policies. However, this view ignores the way coalitional politics often 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 led to rapid economic growth sufficient to support redistributive politics. Yet they also 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. (c) 2005 Elsevier Ltd. All rights reserved.