Striving for Inclusive Development

From Pangkor to a Modern Malaysian State

Sultan Nazrin Shah

Written by a prominent author on the subject matter
Covers Malaysia's impressive economic and social transformation over the past 150 years
Includes a concluding chapter that offers a forward-looking assessment of the complex challenges Malaysia still has to face
Serves as a handy guidebook for economists and the general public interested to know more about the subject matter
Provides detailed statistical data relevant to the economic period discussed

Striving for Inclusive Development

From Pangkor to a Modern Malaysian State

Sultan Nazrin Shah

Description

By the author of the highly acclaimed Charting the Economy, this book is the most comprehensive study yet of Malaysia's impressive economic and social transformation over the past 150 years.
Drawing on primary data sources, archival documents and cutting-edge national and international research, Sultan Nazrin Shah traces in detail Malaysia's fascinating journey, starting from the signing of the seminal Pangkor Treaty in 1874, through British occupation to the present.
The author unearths the true roots of Malaysia's economic and social development-its people, their human capital and well-being, as well as economic structures-including how the British established institutions for the expansion of the lucrative tin and rubber trade, and how they encouraged labour immigration to support their economic ambitions.
The outbreak of World War II and the Japanese occupation forced the British to rethink their strategy for Malaya, which experienced a sequence of turbulent events through to the formation of Malaysia in 1963.
The 1960s saw solid economic growth, but it failed to benefit the bulk of the population, helping to trigger ethnic clashes. One response by the government was the start of redistributive policies and aggressive affirmative action, with the launch of the New Economic Policy in 1971.
Almost 50 years later, sustained rapid economic growth and a modernizing economy have led to fast-rising incomes, the ending of extreme poverty and the emergence of a sizeable middle class, despite setbacks during financial and economic crises.
Striving for Inclusive Development makes it clear that the country still faces huge and complex challenges. Building on its analysis of the past, this landmark book concludes with a forward-looking assessment of these challenges, and sets out Sultan Nazrin Shah's vision for an inclusive and sustainable future.

Striving for Inclusive Development

From Pangkor to a Modern Malaysian State

Sultan Nazrin Shah

Boxes xii
Figures xiii
Tables xvii
Maps xix
Abbreviations xx
Preface xxii
Introduction xxiv

PART 1 FORMING A NATION AND A MOSAIC POPULATION

Chapter 1 From British Intervention to Independence
The Straits Settlements of Penang, Melaka, and Singapore
Penang
Melaka
Singapore
Governance of the Straits Settlements
The Pangkor Engagement, 1874
The Federated Malay States and Their Governance
The Unfederated Malay States and Their Governance
Kelantan and Terengganu
Kedah and Perlis
Johor
Administration of the Unfederated Malay States
Administration of British Malaya, 1900-1945
Malayan Civil Service
District Offices
Administration during the Japanese Occupation, 1941-1945
Administration of North Borneo and Sarawak
From Fragmentation to the Federation of Malaysia, 1945-1963
Decolonization to Merdeka, 1945-1957
Malaya to Malaysia, 1957-1963
Maintaining Law and Order
The Military
The Police
The Justice System
The Tax System
The Financial System
New Straits Settlements Dollar
Conclusions

Chapter 2 Population and Migration
Counting and Classifying the People
How Population Classification Has Evolved
Major Categories of Ethnic Classification
Changing Classifications of Ethnic Subcategories
A Century of Migration to 1957
Chinese Migration
Indian Migration
Javanese Migration
Population Growth, 1871-1957
Impact of Migration on the Population of the Straits Settlements and Federated Malay States, 1871-1911
Impact of Migration on the Peninsula's Growth and Ethnic Composition, 1901-1957
Impact of Migration on the Sex Ratio of the Peninsula's Population
Population Policy After 1957
Ethnic Balance and the 1969 Riots
A 70 Million Policy
Lower-skilled and Higher-skilled Emigration, 1957-2017
Population Growth and Changing Ethnic Composition, 1957-2017
Sabah and Sarawak, 1963-2017
A Century of Spatial Redistribution, 1901-2017
Urbanization
Distribution by States
Conclusions
Annex Table 2.1 History of ethnic sub-classifications used in Malayan/Malaysian population censuses

PART 2 ENHANCING HUMAN WELL - BEING

Chapter 3 Building Human Capital
Ethnically Segmented Education in Colonial Malaya
Malay Vernacular Schools
Chinese Vernacular Schools
Indian Vernacular Schools
English-medium Schools
Islamic Schools
North Borneo and Sarawak
Higher Education in Colonial Malaya
Modernization of Education Policy
Education Policy After the Japanese Occupation
Education Policy towards Merdeka
Post-independence Education Policy Reforms
Planning and Human Capital Development
Emergence of the Private Sector and Liberalization of Higher Education
Educational Inputs, Impacts, and Outcomes
Education Expenditure
Universal Literacy
Increasing Enrolment at All Education Levels
Improving Pupil-Teacher Ratios
Rising Educational Attainment
Supply of and Demand for Human Capital
Challenges in Human Capital Development
Performance in International Assessments
Why did Malaysia's Performance Decline in International Assessments?
Improving the Quality of Education
The Challenge of Innovation
The Brain Drain
Conclusions

Chapter 4 Increasing Well - Being
Health and Development in Colonial Malaya
Sanitary Boards
The Medical Department and the Expansion of Public Health
Hospitals, Research, and Training
Health Care from World War II to Independence
Impact of Colonial Health Measures
Post-independence Health Policies and Their Impact on Well-Being
Health Policy
Health Outcomes
The Demographic Transition
The Fertility Transition and Its Impact on Well-Being
The Fertility Transition
Changing Family Size and Female Labour Force Participation
Changing Family Size and Women's Well-Being
Changing Family Size and Impact on the Population's Age Structure
The Demographic Dividend
Conclusions

PART 3 EXPANDING AND DIVERSIFYING THE ECONOMY

Chapter 5 Economic Growth and Change , 1874 - 1969
GDP Growth and GDP Gaps, 1900-1969
Data and Data Sources
Growth of Per Capita GDP
Convergence and Gaps in Per Capita GDP
Post-Pangkor Engagement, 1874-1899
Growth, Volatility, and Reversals, 1900-1941
The Rubber Boom, 1900-1929
Volatility in Tin Output and Prices
The Great Depression and Its Aftermath, 1930-1941
A Segmented Economy and People
Japanese Occupation, 1941-1945
Recovery, 1946-1949
Commodity Dependence and Institutional Transformation, 1950-1959
Post-independence Economic Priorities, 1960-1969
Conclusions

Chapter 6 Growth , Productivity , and Wealth Since Independence
The Record on GDP Growth
Income Convergence and Catch-up
Total Factor Productivity Growth and Input Growth
Factor Productivity Benchmarks
Components of Labour Productivity Growth
Structural Change, the Structural Bonus, and Sector Productivity
Structural Change
Structural Bonus
Sector Productivity
Demographic Dividend
Genuine Wealth
Conclusions

Chapter 7 Advances , Reversals , and Changes , 1970 - 2017
Outline Perspective Plan 1, 1971-1990
New Economic Policy: Rationale and Scope
Targets and Policies in OPP1
Outcomes, 1971-1980
Outcomes, 1981-1990
OPP1 Summary
Outline Perspective Plan 2, 1991-2000
The National Development Policy: Rationale and Scope
Targets and Policies in OPP2
Outcomes for OPP2
Outline Perspective Plan 3, 2001-2010
The National Vision Policy: Rationale and Scope
Targets and Policies in OPP3
The Global Financial Crisis and Great Recession, 2008-2009
Impact and Responses
Outcomes for OPP3
The Tenth Malaysia Plan, 2011-2015
Targets and Policies in MP10
Outcomes for MP10
Productivity
Export Diversification
Innovation-led Growth
MP11 and the New Directions Set in Its Mid-Term Review
Conclusions

PART 4 ACHIEVING GROWTH WITH EQUITY

Chapter 8 Agricultural Development and Poverty Reduction
Historical Context: The Horns of a Dilemma
Structural Transformation
State-level Agricultural Development and Poverty Reduction, 1970-2015
Poverty and Economic Data
Measures of Structural Transformation at State Level
Agricultural Commodities
Structural Transformation at State Level
Linkages between Agricultural Growth and Poverty Reduction
Commodity Production and Poverty Reduction
Results
Conclusions
Annex Table 8.1 Steady progress in poverty reduction halted during the Asian financial crisis but resumed in year 2000
Annex Table 8.2 Controlling for time-related structural changes in the economy, 95 per cent of variation in poverty is explained
Annex Table 8.3 An increase in real GDP per capita lowers poverty rates
Annex Table 8.4 Rice production has different impacts on poverty at state level
Annex Table 8.5 Palm oil production has different impacts on poverty at state level

Chapter 9 Inequality : A Century of Change
Inequality and Consumption in Malaya, 1900-1939
Piece-wise Linear Lorenz Curves
Lower-bound Gini
Intra-standard Consumption Variance
Intra-standard Dispersion
Simulated Indicators of Inequality
Summary of Inequality in the Colonial Era
Measuring Income Inequality in Malaysia, 1970-2016
Limitations of Income Survey Data
Income Surveys and the National Accounts
Malaysian Household Income Surveys
Type of Income
National Trends in Inequality
Mean and Median Incomes
Lorenz Curves
Gini
Percentile Ratios and Shares
Impact of Financial Crises on Income Inequality
International Experience
The Macroeconomic Impact on Malaysia
Malaysian Inequality in Crisis Years
Differentials in Income Inequality
Ethnicity, Strata, and Household Size
Education
State
Determinants of Income Inequality
Modelling Determinants
Model Results
Conclusions
Annex Table 9.1 Residents of Kuala Lumpur are more likely to be in the top quintile-logistic regressions: Top-quintile
Annex Table 9.2 Tertiary education raises the likelihood of high income- logistic regressions: Top 5%

PART 5 CREATING AN INCLUSIVE AND SUSTAINABLE FUTURE

Chapter 10 Working Towards an Inclusive and Sustainable Future
One: Affirmative Action
Two: Diversified Development
Three: Immigration and Labour Market Regulations
Four: Environmental Management for Sustainability
Five: Implementation
Administrative Alignment and Configuration
Human Resources
Data for Evidence-based Policy
References
Index

Striving for Inclusive Development

From Pangkor to a Modern Malaysian State

Sultan Nazrin Shah

Author Information

Sultan Nazrin Shah

Sultan Nazrin Shah is the Ruler of Perak, and the Deputy Yang di-Pertuan Agong of Malaysia. He is Chancellor of the University of Malaya. He is an Honorary Fellow of Worcester College, Oxford, and of Magdalene College and St Edmund's College, both Cambridge. Sultan Nazrin Shah has a PhD in Political Economy and Government from Harvard University.