Government intervention in the Malaysian economy, 1970-1990: lessons for South Africa

Abstract

This study examined the role the Malaysian government played in developing the Malaysian economy as a means to eliminating poverty and inequality and explored the lessons South Africa can learn from Malaysia's development experience. Under British colonial rule Malaysia developed a divided multi-ethnic society characterised by gross inequality and high levels of poverty. Jolted by the 1969 race riots and in a major departure from the laissez-faire economic policy, the government embarked on the New Economic Policy in 1970. This ambitious twenty-year social engineering plan ushered in greater state intervention in the economy. It greatly reduced poverty among indigenous Malays and made substantial progress towards achieving inter-ethnic economic parity.