133 11 Malaysia’s development strategies Governing distribution-through-growth Greg Felker Malaysia’s economy grew at an average annual rate of almost 6.5 percent from 1961 to 2011. With sustained growth came profound structural change, transforming a post-colonial commodity exporter into one of Asia’s newly industrialised countries (NICs) ( Table 11.1). Yet, Malaysia fits uneasily into the conceptual terms that inform much of the literature on comparative development strategies. The country’s heavy reliance on trade and foreign investment appears exemplary of a broadly liberal, outward-oriented economic regime, yet the government has intervened extensively to direct the course of growth. Economic policies have promoted private sector competitiveness while simultaneously pursuing a far-reaching programme of inter-ethnic socio-economic redistribution. Finally, despite extraordinary continuity in political leadership since independence, the focus of development policy has changed dramatically several times in response to major political or economic crises. What explains Malaysia’s seemingly paradoxical development trajectory – state interven- tionism amidst deep integration into global markets, growth-focused policies permeated by distributional politics, and sustained growth across multiple policy shifts? Katzenstein (1985: 29–30) famously argued that the economic policies of small states are best understood as efforts to satisfy, simultaneously, the demands of international economic competitiveness and domestic political legitimation. At several junctures in Malaysia’s history, external shocks have induced downturns that precipitated reforms aimed at reviving growth momentum ( Figure 11.1). Domestic political pressures have likewise motivated far-reaching policy Table 11.1 Structure of GDP by sector, 1961–2010 (value-added, %) Sector 1961 1970 1980 1990 2000 2010 Agriculture 36 29 23 15 9 10 Industry 21 27 41 42 48 41 Manufacturing 8 12 22 24 31 25 Services 43 43 36 43 43 48 Source: World Bank, World Development Indicators, http://data.worldbank.org/data-catalog/world-development- indicators. Copyright © 2015. Routledge. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 11/20/2014 2:54 PM via ST MARYS UNIV AN: 873063 ; Welsh, Bridget, Weiss, Meredith L..; Routledge Handbook of Contemporary Malaysia Account: s9008320