In 1957 Malaysia got its independence from the United Kingdom and gained the World Bank’s classification system and it was termed as a middle income county. After this Malaysia stated its prosperity and primarily they started it as commodity exporter like rubber, tin palm oil and petroleum jelly, which helped them to increase six to seven percent every year from the year 1970 to 2000. Which resulted the poor people fell to fewer than a million or about 3.9 percent of the total population of 26.2 million people. The per capital income was $5300 yearly in 2007. Right now Malaysia has become an upper middle income country. The country have faced several structural changes and also the income comparators has faced it. But it is very friendly with external term of trade to support the domestic economic growth. Almost above thirty percentage of the agricultural share has fallen of GDP to below ten percent and that twenty seven percent of industry rose to about fifty percent. Since 1970s it wa favorable for industrialization of the economy and the overall rate of growth raised to ten percent per year In the late 1980s. at that time manufactured imports has played a very meaningful role and later on raised five percent of the overall export to above seventy percent now. The total share increased from forty percent to eighty percent of the GDP. The main determination of this term paper is to elaboeate the development pattern of Malaysia. The points that have been given by the world banks commission on growth and development will guide us to elaboeate it. The primary points will help us understand hoe the economic growth occurred in the economy and also will help us know the structural changes and the economic transformation.
Overview on Economic Growth
Malaysia had a population of 7.4 million during the time independence from the United Kingdom. The population has increased rapidly with the time. For example- in 2005 the country had and increased population of 26.8 million people and on the present time the population has raised to almost about 29 million. The current population shares reflect major changes over time in favor of the Bumiputera, largely because of their higher fertility levels. Other than from the natural increase the growth of population reflects a fixed arrival of immigrant labor from Indonesia, the Philippines Bangladesh and also Nepal. Before 1957 this country was a low income one and had a very unstable economy whose main strength were rubber and tin production and some trade centered Penang and Malacca. Business enterprise were very small scale and was located in a huge manner and predominantly family based. With the time the economy became very vast and beyond agricultural and primarily commodity such that manufactured goods not account for a very big amount share of the GDP of the country’s total exports. Urbanization was become very fast as in 2005 some of sixty three percent of Malaysia’s population lived in the urban area but it became quarter in 1957. Although more urbanized today’s historically the Bumiputera were rural?based. Since 1970, Malaysia has based its economic development strategy on three long?term policies: the New Economic Policy in 1970–90, the National Development Policy in 1990–2000 and the National Vision Policy in 2001?10. Even though the main attraction of the development was on the economic growth but Malaysia development intends to benefit all groups or communities in society in an equitable manner. Beginning in the late 1960s, specifically following racial riots across the country, distribution issues became more important and moved to the forefront. The overriding objective of the NEP, maintained in the NDP and the NVP, was to preserve national unity by exterminating poverty irrespective of race, and by restructuring Malaysian society to reduce the identification of race with economic function and geographical location. Direct policies to assist the Bumiputera obtain parity with the non Bumiputera in income and wealth lay at the heart of the distributive strategy. Growth with equity continues to be the guiding development strategy.
This privatization actually shows us many point that have been made earlier about the poly making of the economy of Malaysia and specially it was discussed about the of a reform cluster approach to address coordination issue as well as facilitate legislative passage and with social acceptance of related but also visible and clear policy measure. Prime Minister Mahathir Mohamad first introduced Malaysia’s privatization policy in 1983, together with the Mlasia Inc which was inspired by Japan Inc, and viewed the country as a singlr cooperatin with the government was providing and also maintaining an enabling environment for business and enterprise and the private sector as an engine of the growth. Along with the growth private enterprise the government tax revenue would grow and enabling further financing of development projects. In 1985, the Economic Planning Unit in the Prime Minister’s office delivered the Guidelines on Privatization, outlining the rationale and approach to privatization and in 1999 the government published the Privatization Master Plan. A number of factors influenced the privatization policy. The change in leadership from the administration of Tun Hussein Onn to that of Mahathir marked an important political and economic milestone. Mahathir’s 22?year rule witnessed the introduction of several new policies, and privatization was a primary example. With the NEP, the public sector became more active and interventionist and public investment reached nearly half of total investment by the early 1980s.
Political System and Leadership
An understanding of the politics and political system is helpful in understanding the nature of leadership and policy making in Malaysia. Ethnic considerations have and continue to dominate politics. Dealing with ethnicity issues has been a central task for leadership, and the Malaysian case study presents an example of how a leadership has dealt with economic efficiency, growth, and nation building in an ethnically divided community. In attempting to understand leadership, it is not sufficient to consider only the personal traits of leaders. An examination of the access of leaders and their interaction with followers is also essential. Traditional values associated with Malay leadership include the need to avoid conflict, an emphasis on traditional courtesy and good manners, wide consultation, and the avoidance of direct confrontation. A test of leadership is whether followers trust a leader sufficiently to follow him when he embarks on a difficult and new course of action. A leader, therefore, needs to instill loyalty, provide tangible material benefits, and to stamp his legitimacy. However, Mahathir, who was Prime Minister during much of the period covered by this case study, attempted to straddle both traditions and once remarked, “You have to lead. You should be sensitive to what your followers think. But if you do exactly what they want you’re not a leader.”11 The specific performance requirements for Malaysian leaders are complex and reflect the interaction between communal traditions, the new ethnic politics, the distribution of rents from Malaysia’s vast natural resources, and the growth imperative in an increasingly competitive international economy. This is not to suggest that personal traits do not matter. The four desirable personal qualifications are that the leader should fight for the Malay cause, should not be aloof, should have style, and be of aristocratic birth