The Malaysian anomaly: understanding the consequences of affirmative action in the developing world

Abstract

This dissertation examines the consequences of ethnically based policies of preference on inequality in Malaysia. The New Economic Policy (NEP), that is the compilation of these policies, has been one of the most ambitious and aggressive affirmative action programs in the world. More importantly, the NEP was a response to escalating ethnic tension that had culminated in an outbreak of ethnic rioting following national elections in 1969. The framers of the NEP believed that economic, educational and occupational imbalances between the larger and primarily rural Malays and urban Chinese minority were at the heart of tension and unrest and that without intervention political instability and violence would continue. While the language of the NEP called for an end to any ethnic-based economic segregation in practice, it implemented sweeping change in the form of ethnic quotas in public and private sectors of the economy. The results from this study show that while the beneficiaries of the NEP, the Malays, did benefit from the policies, experiencing dramatic increases in education and occupational diversification, the NEP did not eliminate the concentration of groups in particular sectors of the economy or diminish ethnic inequality in the form of earnings.