The effect of the Mahathir regime on the Malaysian economy

Abidemi Adisa, Michael Farmer and Jamie Bologna Pavlik

Economics of Transition and Institutional Change, 2023, vol. 31, issue 1, 97-114

Abstract: Dr. Mahathir bin Mohamad is often credited with Malaysia's dramatic economic success post‐1980. It is well known that the Mahathir regime installed centralized power in the Office of the Prime Minister (PM) and greatly extended state capacity through a far‐reaching clientelist system. Prima Facie, the Malaysian experience appears to validate power centralization and state capacity as complementary to economic development. Though these changes did make Malaysia more susceptible to corruption, dramatically exhibited in 2015 with the 1MDB 5 billion dollar scandal, it has been argued that the clientelist political structure installed in Malaysia generally manages corruption at tolerable levels in order to provide the state the capacity needed to implement controls for economic development that began in the 1980s. While Malaysia experienced impressive economic growth during the Mahathir administration, our test using the Synthetic Control Method finds that GDP per capita fell well below what would have been expected under the governing structures in place in the 1970s, before Mahathir took office—a loss of approximately $4000 per capita below its potential. This study provides evidence of powerful negative economic consequences attributable to greater power centralization and enhanced state capacity inaugurated under Mahathir.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/ecot.12327

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:ectrin:v:31:y:2023:i:1:p:97-114

Access Statistics for this article

More articles in Economics of Transition and Institutional Change from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().