Capital Flows, Political Cleavages and Economic Policy Choice : Malaysia during the Asian Economic Crisis

다국어 초록 (Multilingual Abstract)

Of the four formerly high-performing Asian economies that were hit hardest by the unprecedented magnitude of economic crisis in the late 1990s, namely, Thailand, Malaysia, Indonesia and South Korea, Malaysia alone opted to retain a pre-crisis development model while defying neoliberal reforms. This study deals with crucial structural conditions that favored Malaysias unorthodox policy choice during the crisis. It holds, specifically, that the comparatively heavy reliance of Malaysia on foreign direct investment(FDI) in pre-crisis development financing enabled the country to maintain a relatively great extent of sovereign policy autonomy in adverse international circumstances, by reducing external vulnerability to volatile short-term capital flows. This study continues to assert that the great contribution of FDI to development financing, in turn, was due largely to Malaysias unique ethnic cleavage structure. This implies that political cleavages ultimately determine economic policy choice.