1 Open Terrain: The Impact of the New Economic Policy on US Foreign Direct Investment in Malaysia. Shakila Yacob Department of History, Faculty of Arts & Social Sciences, University of Malaya, 50603 Kuala Lumpur, Malaysia shakila@um.edu.my IEHC 2006 XIV International Economic History Congress SESSION 94: Foreign Companies and Economic Nationalism in the Developing World after World War II The introduction of the New Economic Policy (NEP) in Malaysia in the early 1970s and its concomitant process of “localization”, referring to the efforts of newly independent countries to increase local self- determination and participation in the economy as well as national identity, has been the subject of numerous studies on post-colonial Malaysian economy. However, most of the literature focuses on the impact of localization on European-owned enterprises and the latter’s role in promoting industrialization in Malaysia (Saruwatari, 1991; Jones, 2000; White, 1996, 1999, 2004; Martin, 2003). Thus, frequently overlooked are the effects of the new policy on the acquisition, transformation and incursion of former US-owned enterprises into new industries and their subsequent existence. To fill in the lacuna in the corpus of knowledge on the impact of the NEP on foreign direct investment (FDI), this paper traces the trajectory of US FDI from colonial Malaya to post-colonial Malaysia. The aim is to ascertain to what extent the NEP was a manifestation of economic nationalism, to gauge its impact, with especial reference to the process of localization (also known in Malaysia as Malayanisation), on the growth and survival of foreign firms in general and US-owned firms in particular. The paper evaluates the reasons why US businesses divested from, or continued to invest in and form joint ventures with,