Discuss Malaysian country case report on globalization……………
Impacts of globalization
Malaysia being a small country located in eastern Asia stands to benefit a lot from globalization process. The country was initially an advocate of Marxist ideology due to its inclination to the communism and socialism culture. Malaysia has been rated among the most globalized nations since gaining its independence.
The country is known for its long history of openness to trade, ideas and movement of people from different regions of the world. International flow is not therefore a new thing to Malaysia and did not begin with globalization. Malaysian nationalism and political integration is a combination of cultural, economic, political and social factors.
Globalization has had enormous economic benefits for countries that have embraced it. These economic benefits include increased trade, enhanced international flow of capital, formation of regional trading blocks and formation of international agreements such as world trade organization to oversee trading world activities.
Malaysia came up with vision 2020 in 1991 which aimed at pushing the country into positions of industrialized countries by the year 2020, which promted its movement into global capitalism. Globalization became a state project to propel the country towards achieving its 2020vision.
Being a Muslim dominated nation, Malaysia feared for the intrusion of western cultures into their country but still showed its commitment to the concept of globalization. With the collapse of communism after disintegration of U.S.S.R, the only viable option that remained was free enterprise system which Malaysia pursued.
Though globalization was initially seen as being equivalent to westernization in Muslim dominated nations, Malaysia included, this has not been the case. A study by Heinrich Boll Foundation, (2004) has shown that globalization and modernization are not equivalent to westernization.
There were growing sentiments against globalization by the people of Malaysia for fear of bringing western values into the country as pointed out by Embong, (2001). However economic growth takes an upper hand in everything and globalization brings in economic growth and development.
The government therefore favored globalization to help in realizing vision 2020 and economic growth. For instance, industries were privatized to bring in foreign firms in areas of electronics. Every attempt to block globalization however led to clash between the government and Malay businessmen/investors.
The country pursued both progressive and conservative policies of capitalist globalization and political Islam in 1990s. The reason was to pursue economic development and vision 2020 while at the same time maintaining national identity, (Long, 1996).
In cultural and social sector, globalization has allowed over the years diffusion of sports across counties (Bairner, 2001), which has led to cultural exchange among nations. Malaysia has so far benefited to a greater extent from the process of globalization. It has offered Malaysian firms an opportunity to penetrate world markets.
There were many questions as to whether globalization was good or bad for the Malaysia and several views were raised in support and against globalization. However, whether bad or good, globalization is happening in Malaysia just like it’s in many other countries. Globalization has so far yielded both negative and positive effects on Malaysia.
Locking the country out from the rest of the world has led to down fall and extinction of many countries, and Malaysia do not wish to go this way and have adopted the concept of globalization albeit in small scale until 1997 when it went full blast.
Malaysian businesses require global market for their growth since local market is too small, with a population of less than 27.5 million people. Malaysia population needs capital goods such as factory equipment and farm machineries which they don’t produce. Globalization has offered a greater opportunity to import capital goods.
Malaysian economic development model is similar to East Asian nations. The country has been open to foreign trade which has led to rapid economic growth for the past three decades leading to general reduction in poverty levels among its citizens. According To the UNDP, (2006) report, Malaysian poverty index has fallen from 50 percent in early nineties to less 7.5 percent in 1999.
Manufactured exports have significantly grown over the past three decades in electronics, making the country one of the leading exporters of electronics and semi- conductor goods in the world.FDI increased drastically, being attracted by availability of labor, government incentives, developed infrastructure and stable exchange and inflation rates.
Globalization has enabled Malaysia firms to specialize in areas of production where they have comparative advantage over other countries and import other goods. This has greatly improved their balance of payments position. Malaysian firms have invested in other Asian nations where production costs are cheaper.
Malaysia however has been skeptical about going global until the years of 1997, after the Asian financial crisis. The country was forced to open up its markets and embrace globalization on large scale.
In 1997 financial crisis, FDI dropped by 81% as financial and security markets performed poorly leaving Malaysians with no option but to pursue globalization. Globalization in all aspects ranging from economic to socio- cultural aspects was pursued.
Cultural diversity of Malaysian people was displayed in global markets bringing, sporting activities were globalized with Malaysia hosting several world events where their rich cultural diversity was displayed to the world population and attracted many tourists to the country.
Globalization increased cultural diversity in Malaysia. It brought a new global culture while increasing global cultural diversity at the same time, (Embong, 2001). The issues of gender inequality have greatly declined in Malaysia and Asia due to globalization.
Global media such as internet and social network has played a significant role towards enhancing global culture in Malaysia. Globalization has played a role in spreading modernity beyond Europe to Malaysia and led to social and political changes similar to those of Europe.
Cultural globalization just like economic, has faced resistances in Malaysia in form of language, religion and national identity which greatly limited its adoption; indigenization has been a major counterforce to cultural globalization.
Malaysia started showing its interest in globalization in September 1994 by joining GATT (General agreement on Trade and tariffs) and also ratified the formation of WTO (World Trade Organization.
Ever since then, country’s business competitiveness has risen. Malaysian businesses have grown due to heir exposure to global challenges and competition. Currently the country has attracted foreign talents which are very useful to its developing industries. It’s making effective use overseas brain drain.
Malaysian government headed by Anwar Ibrahim, advocated for free trade and opened its borders to foreign goods. They reduced import tariffs by 79% in 1992 and converted non tariff measures such as quotas into tariffs in an effort to liberalize Malaysian market. This helped to increase Malaysian exports and imports, and led to improved consumer welfare, balance of payments and economic liberalization.
However, Malaysia being underdeveloped countries as it was, has suffered from negative economic and political effects of globalization. For instance, globalization has been blamed as being the cause for the 1997 financial crisis.
ASEAN free trade agreement, an extended form of globalization, has been cited to be the cause of increased income inequality and poverty that led to the collapse of local small and medium scale industries in Malaysia. Textile and clothing industries were neither spared as the globalization effects swept across Malaysia.
Economic liberalization exposed the young Malaysian economy to external shocks and undermined growth of domestic industries. Consequently Malaysia incurred gradual trading losses of up to RM 53,691in 1997, reduced exports and imports.
Although foreign direct investment increased into Malaysian, this however led the elimination of investment conditions that favor domestic industries leading to more transnational corporations at the expense of local industries. This adversely affected pharmaceutical industry resulting in significant increases in prices of drugs.
Globalization in Malaysia can be seen as double edged sword, yielding both positive and negative results for the country. Globalization should therefore be approached with great caution, , rationally, moderately and selectively but not whole- heartedly as many people believe.
Globalization need to be embraced but with reservations. There are limits to it and country should not open up 100% to globalization. Globalization has indeed changed Malaysia for the better despite its limitations.
We learn from Malaysian case analysis and in line with UNDP, Malaysia, (2006) findings, we learn that globalization attracts foreign direct investments, leads to economic growth and development which in turn reduces poverty levels and that it has both positive and negative effects on the nation.
From the Malaysian analysis, the process of globalization to be successful, some pre- conditions for economic growth and development has to be met. These include effective governance and rule of law, human capital development, sufficient physical and social infrastructures and macro economic stabilities for it to flourish realize its benefits.
Bairner, A. (2001). Sport, nationalism and globalization. Albany, NY: State University of NewYork Press.
Heinrich Boll Foundation, (2004): Asian Modernity –Globalization Processes and Their Cultural and Political Localization; Documentation of a workshop held on July 6th 2004 in Berlin
Long, Norman, (1996). “Globalization and Localization: New Challenges to Rural
Research,” in: Henrrietta L. Moore (ed.): The Future of Anthropological Knowledge.
London and New York: Routledge, 37-59.
Abdul Rahman Embong (2001): “The Culture and Practice of Pluralism in Postcolonial
Malaysia,” in: Robert W. Hefner (ed.): The Politics of Multiculturalism: Pluralism and
Citizenship in Malaysia, Singapore, and Indonesia, Honolulu. University of Hawai’i Press, 59-85.
United Nations Development Programme (UNDP), Malaysia.(2006): Malaysia international trade, growth, poverty reduction and human capital development. Published by the United Nations Development Programme (UNDP), Malaysia.© UNDP. All rights reserved.First published June 2006.
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