In 1991, Malaysia had embarked on a 30-year development plan called Vision 2020, aspiring to become a developed country by Year 2020. The aim of this research is to find out why Malaysia has failed to get into the First World by identifying some of th...
In 1991, Malaysia had embarked on a 30-year development plan called Vision 2020, aspiring to become a developed country by Year 2020. The aim of this research is to find out why Malaysia has failed to get into the First World by identifying some of the major development gaps and to explain its failure to become a developed country from the perspective of three selected theories of development, from analyzing available data and literature on the various components of development. This research confirms that Malaysia is stuck in the middle-income trap, unable to transition to the high-income level enjoyed in the First World.
Firstly, using Douglas North’s theory of institutional changes and economic development, this research identifies two ideologies that are inimical to the economic wellbeing of Malaysia - Ketuanan Melayu (Malay supremacy) ideology and Ketuanan Islam (Islamic supremacy) ideology. Both these two ideologies condone racism, disregard meritocracy and promote inefficient allocation of scare resources, just to favor the bumiputeras (mainly Malays). The institutions driven by these two ideologies do not create wealth maximizing environment for the country to prosper but cause wastage, corruption and social division.
Secondly, from the perspective of Fukuyama’s theory of development, the Malaysian government became too strong during the era of Mahathir Mohamad. He removed the checks and balances vital for good governance. As a result, the civil service has been compromised and unable to provide the necessary public services needed to help Malaysia achieve the socio-economic development level of the First World. Rule of law is weak. Corruption is a norm now. The never-ending ethnocentric policies have resulted in a moderate economic performance over time, in which high economic growth rates are not sustainable. The education system is unable to produce the high-quality human capital and technological innovation needed to get to the First World. Property rights may not be secure and the environment is often neglected. Civil society was rather weak before the advent of BERSIH. With low democratic accountability, no capable leader can rise to lead the country to First World.
Thirdly, by analyzing the past development of Malaysia with Acemoglu and Robinson’s theory of development, I found that Vision 2020 was launched in 1991 with extractive political institutions and extractive economic institutions in place, and thus Vision 2020 was destined to fail from the start. Both extractive political institutions and extractive economic institutions reinforce each other in a vicious cycle. Over the decades, reform programs have failed to turn them into inclusive institutions. Today, the nature of both its political and economic institutions are still extractive, which means positive change and reform will be difficult. Making matters worse, the religion of Muslims who make up majority of the citizenry, is exclusive in its doctrine and tends to make them uncompetitive. Islamization of the institutions in a multi-ethnic and multi-religious Malaysia can only result in a fragmented nation.
Malaysia must reform its institutions to be inclusive if it ever wants to get to the First World. It needs to abandon the two insidious ideologies of Malay supremacy and Islamic supremacy, and adopt true meritocracy so that scarce resources in the country can be efficiently used and not wasted, and national productivity can be increased. All the other necessary reforms will fall into place once inclusive ideologies are adopted. The findings of this research are subject to the limitation of available data and literature that were read and analyzed within the limited duration of this project.