Malaysia’s Pattern of Economic Growth
Malaysia has seen strong rates of economic growth from the 1980s. Veritably, in the period leading up to the East Asian Financial Crisis, it was achieving almost double figures in GDP growth.
Figure 1.1 shows the growth Malaysian economy from 1970 till 2000 by percentage of GDP[2] growth along with a timeline of significant industrial developments. This figure will be revisited during later posts with supplemented with economic policy implementation as well as notable periods of transition. From the outset, Malaysia experienced three significant economic crises during this period, in 1975, 1986 and 1998. The 1975 period is attributed to the OPEC oil crisis[3] and also marks the implementation of the New Economic Policy. The 1975 period of recession was due to the halving of crude oil and palm oil prices[4]. Finally, the 1997 recession was caused by the well known East Asian Financial Crisis.
Recessions are an integral process of all economies; even MEDCs[5] experience downturns every so often. Contemporary examples include most of Western Europe and the United States during the 2008 Financial Crisis caused by sub-prime mortgage bubbles. Developed states usually deal with recessions by way of providing substantial financial assistance to financial institutions (both central and private banks). They are able to manage this due to the fact that they are able to draw upon their large reserves of cash; for example, the US Federal Reserve appropriated US$85bn in the efforts of bailing out AIG, a major insurance firm[6] while the United Kingdom injected £36bn[7] (equivalent of US$60m) in bailing out its banks in 2008.