Growth, Distribution and the NEP in Malaysia

Transcription

1 Growth, Distribution and the NEP in Malaysia Jomo Kwame Sundaram Malaysia Forum, 4 April 2010, Columbia University

2 Malaysian Development 5 phases: : laissez faire, import substitution, rural development, growing unemployment : NEP, X industrialization, petroleum : Look East, heavy industry : liberalization, X industrialization2, bank crisis BAFIA, sterling losses, 1984 K controls, endaka end Asian crisis : state sustains growth

3 ISI: tariffs, MIEL: industrial zones, MIDF FDI guarantees Rural devt: Razak v Aziz Ishak Malaysian common market Affirmative action: SEDCs; Bumi economic congress, Bank Bumi, MTI

4 ISI EOI: Industrial Incentives Act, L law reform, FTZs female workers May 1969: rejection of Alliance palace coup BN Increased unemployment + inequality ethnic perceptions redistribution NEP 1975 ICA; Oil 1974 PDA fiscal space public investments

5 : Mahathir 1 Heavy industrialization (ISI2) Look East: Labour policy Volcker International economic slowdown Isi penuh (full employment) jimat cermat (austerity)

6 : Mahathir 2 Privatization + contracting out partial educational + economic liberalization 1986 Promotion of Investments Act Financial crisis Banking crisis 1989 BAFIA EOI2 boom

7 : M3 A N crisis greater public consumption, investments Private investments down, FDI down Neglect of technology policy Renewed financial liberalization despite global financial crisis!

8 Lessons Prioritize real economy, not finance Nationalist vs ethno-populist Pragmatism, not dogma Distribution outcome of contention, rent-seeking

9 Growth highest during (NEP, M1) RM $ (1978 prices) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Real Per Capital GDP and its Annual Growth Rates Alliance Phase N E P Phase Econ Liberalisation Per Cap GDP % Growth GDP % Growth Per Cap. GDP $ % Growth 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6%

10 Gross domestic product by sector, Agric. & Forestry Mining & quarrying Manufacturing Construction Services

11 Output by sector,

12 Export composition, % 90% Manufacture 80% 70% 60% 50% 40% 30% 20% 10% Oil & Gas Tin Timber Palm Oil Rubber Manufactures Others Oil & Gas Tin Timber Palm Oil Rubber 0%

13 Per capita national income,

14 Population by location, (%) Rural Urban

15 Employment by sector, (%) Agric. & Forestry Mining & quarrying Manufacturing Construction Services

16 Sectoral employment change, Agriculture & forestry Mining & quarrying Manufacturing Construction Services Total

17 Poverty trends, Total Rural Urban Poorest

18 Poverty (b), Gini (r),

19 Employment status, Employer Own account worker Employee Unpaid family worker

20 Ethnic household income ratio, Chinese/ Malay Chinese/ Indian Indian/ Malay Urban/ Rural

21 Occupations by Ethnicity, (%) Bumi Chin Ind Bumi Chin Ind Managers Professionals Technicians Clerical Services Sales Agriculture Crafts & Trades Production Elementary Total

22 Employment Status By Ethnicity, 1957 (%) Employer and own account worker Malays Chinese Indians Others Total (66.1) (28.8) (4.1) (1.1) Unpaid family worker Employee (80.0) (17.8) (0.9) (1.3) (30.8) (42.5) (22.9) (3.7) In employment (47.3) (35.7) (14.5) (2.6)

23 Employment Status By Ethnicity, 1980 (%) Employer Own account worker Unpaid family worker Malays Chinese Indians Others Total (35.5) (51.5) (12.3) (0.7) (64.5) (31.5) (3.2) (0.8) (67.9) (26.2) (4.9) (1.0) Employee (48.3) (36.5) (14.6) (0.6) In employment (53.6) (35.0) (10.7) (0.7)

24 Employment Status By Ethnicity, 2007 (%) Bumiputera Chinese Indians Others Total Employer (41.7) (54.3) (6.7) (0.2) Own account worker (76.0) (24.0) (4.1) (0.6) Unpaid family worker (76.3) (26.2) (3.1) (0.4) Employee (65.0) (23.9) (8.1) (1.1) In employment (66.7) (25.1) (7.1) (1.0)

25 Ethnic ownership of share capital, (%) Bumiputera Chinese Indians Foreigners

26 Bumiputera ownership of share capital, % Total Individuals Institutions Trust agencies

27 Post-crisis investment collapse

28 Private investment down, govt investment up 28

29 Private consumption flat, government spending up Average Growth % in GDP Demand Components Pre Crisis Post Crisis Pvt Consumption Gov Expenditure Investment 29

30 Consumption engine of growth % Share of Demand Components to GDP Growth Pre Crisis Post Crisis Pvt Consumption Gov Expenditure Investment 30

31 Key interest rates low Before After US 16 Dec to 0.25 ECB 5 Dec UK 8 Jan Japan 19 Dec China (1year lending rate) Malaysia (Overnight policy rate) 23 Dec Jan

32 Stimulus package delay slows recovery (% GDP) 1 st stimulus 2nd US 1.1% 6.0% EU 1.5% Japan 2.5% 5.8% China 18.0% S. Korea 1.1% 4.0% Singapore 8.5% Malaysia 1.1%

33 Growth v redistribution? Per capita growth highest during Fiscally sustained (oil fiscal space) After 1984, reduced fiscal space Exchange rate high growth Weak indus. invt finance dominant partial liberalization Asian crisis Slower growth sustained by govt spending, fiscally unsustainable Stimulus delay weak recovery, jobs 4 boys Ethnic patronage problem, not redistribution

34 4,500 SINGAPOREANS HEADING FOR NEW ZEALAND Star Mar 27, 2010 As a new population of foreigners settles in, many of Singapore s own defence-trained talents are moving abroad. By Seah Chiang Nee. WHILE Singapore is busy attracting talents from abroad, some 4,500 of its own better-educated citizens may be heading for New Zealand. Such a large number has come as a surprise for two reasons. One is that the New Zealand is not even a top choice and, secondly, Singapore is said to be recovering from the economic crisis.

35 In 2002, Singapore was ranked as having the second highest migration rate in the world (next to East Timor) migrants per 1,000 citizens. This would have meant that some 20,640 of its 3 million people were emigrating at the time. As I was writing this, a news headline read: Singapore retains its top spot for Asian expats to live in. While hundreds of thousands of foreigners are making a beeline for Singapore, an opposite flow is also happening.

36 The outflow of people has long upset leaders like its founding leader Lee Kuan Yew, who once openly wept when he spoke about the subject. Almost one in four top students in Singapore end up working overseas, said Prime Minister Lee Hsien Loong. Some Malaysians are puzzled by this phenomenon. Critics say there are several reasons for the exodus, including high stress level, a high cost of living (one of the world s 10 most expensive cities), overcrowdedness and too much government control.

37 Thank you Please visit UN-DESA and G24 websites Research papers Policy briefs Other documents Acknowledgements: UN-DESA 37