Political Economy of Malaysian Development Towards Shared Prosperity
Political economic (PE) scholars define PE as an approach that stresses the importance of historical processes, structural forces and institutions in shaping economic outcomes. Understanding PE allows everyone to be critical and cut through the simplistic way we view the world, and thus our economy. Economic development is the outcome of the interplay of many forces and relations, and as such it cannot be well treated singularly in the domain of pure economics . This is especially true in the case of Malaysia where the economic sphere has largely been dominated by political considerations, and the two have always had a large degree of interaction in determining the shape of things to come. In other words, this implies that the best method of studying development in a country like Malaysia is the political economy approach. Within Malaysia, this can be seen through conflicts within the Malaysian federation which is rooted in socio-economic disparities and the struggle for control of natural resource rents, which State Governments previously had exclusive control over, as originally provided for by the federal constitution. The advance of fiscal centralization since then has also aggravated federal-state tensions, which have been relatively ignored due to the long-standing Malaysian pre-occupation with inter-ethnic tensions. Inter-regional resource transfers and central fiscal and political dominance have been used to undermine the more independent State Governments, especially those held by opposition parties. While the federal government is clearly dominant, central control over the State Governments has varied, especially in Sabah and Sarawak, with the continued hegemony of the national ruling coalition depending on successfully combining the carrot with the stick.
By: Aamil Azhar, Research Analyst at Institut Masa Depan
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