Keynote Address: 'Malaysia's Development Bargain: Can it be Renewed and Enhanced?'

A development bargain represents a mutual agreement among stakeholders regarding objectives and strategies for growth.

Economics and politics are closely intertwined, influencing the success or failure of countries’ development.

Common factors affecting countries’ development include (im-)perfect political governance, diversity of political systems and variety of economic strategies.

Successful countries often employ diverse economic policies, including macroeconomic stability, outward orientation via exports, and comprehensive strategies involving infrastructure and education, as part of a broad set of policies for success.

An elite bargain with multistakeholder buy-in is crucial for development and growth.

An elite bargain is where powerful individuals from politics, business, military, civil service, and intellectuals collaborate. It involves both a political deal, determining state control, and an economic deal, concerning resource access and distribution.

Successful elite bargains are marked by a strong, shared commitment to growth and development. Historically, elites have maintained their commitment to development out of conviction, a desire to uphold their legitimacy, and the pursuit of maximizing rents.

Key ingredients to a successful development bargain recipe include a commitment to peace, self-awareness, and a capacity for continuous learning and correction, involving both external and internal accountability.

Malaysia’s development bargain has been relatively successful despite structural imperfections. However, moving forward, there needs to be a stronger focus on inclusivity and accountability.

Phase one (up to 1997) in Malaysia’s development featured a growth bargain with a deeply clientelist and patronage-based economic deal, including land-based capitalism, extensive rent distribution, and multinational corporation involvement, while striving for inclusivity through rent distribution.

The second phase (since 1998) became more open with the inclusion of diverse forces and interest groups, creating risks. Malaysia’s political and economic deal largely built on the same national narrative, but inclusivity is still limited, evidenced by subsidies which are increasingly costly yet ineffective when poorly targeted.

Looking ahead, Malaysia must prioritize greater inclusivity and development and improve internal accountability in constructing Malaysia’s renewed development bargain.