Processes and Achievements of Malaysia's Economic Globalization

Abstract

Integration of the national economy with global economy is the natural outcome and the end result of economic development processes in any nation. In the political economy of the world with unequal nations and imperfect competition the north-pushed capitalist globalization is a suspect of deception for developing countries. The capitalist globalization is a project of market dogmatism founded on the Darwinist social philosophy of ‘survival of the fittest’ – the law of Jangle. It is inherently a scheme of yielding disproportionately large benefits for the efficient industrialized nations. This paper analyses the structure and management of Malaysia’s economic globalization and studies its achievements from national and international contexts. It has used a variety of econometric and statistical tools such as the augmented Dickey-Fuller test, Log-linear Regressions, Chow breakpoint test, and CUSUM test. The results reveal that globalization has made significant achievements in terms of most of the national macroeconomic goals. However, in terms of the international political economy it has failed unexpectedly. Results of the income convergence analyses show that it has failed to reduce Malaysia’s income gaps with USA and Japan, its two major trading and investment partners. It contradicts the general findings of the income convergence studies that the lower income industrializing countries are catching up to the higher income industrialized countries and slowly narrowing the income gap between them. This result, therefore, tends to suggest that even a guided and regulated globalization, like that of Malaysia, will have the tendency to yield relatively more benefits to the developed industrialized economic partners and contributes to the widening of the income gaps between them. The paper concludes that because of the blind eye of globalization to the needs and aspirations of the developing economies, these countries must pursue globalization only, cautiously, rationally, selectively, and never wholeheartedly.