The Disconnected Malaysia

During his maiden visit to Malaysia recently, a fellow Japanese economist working in an international technocratic agency told me, very politely, that he was surprised how inward looking Malaysians are, when it comes to economic policies and doing businesses. Even when compared to other economies of lower level of development.

Two separate pieces of information on the internet today reminded me of how much Malaysia need to change and embrace the world, before we lag further behind.

First, from the World Bank’s Innovations in Emerging Economies Blog, on the the success of India’s Tata.

An Emerging Market Firm's Successful Tactics for Innovation

India's Tata Group presents a most striking case study of how an emerging market company can both do well and do good. …

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So what tactics did Tata Motors employ?

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Tata Motors Managing Director Ravi Kant…, "The trick was how to expose people to the outside world to allow them to see what is happening there rather than drilling change into them through speeches and letters."

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"We want to achieve [success]," Kant says, "the Tata way -- transparently, ethically, and meeting our corporate social responsibility. We want to make India proud."

Second, from the latest Economic Letter of the Federal Reserves Bank of Dallas, on FDI and emerging economies. It outlines the benefits of FDI to emerging economies in terms of stability, trade, savings and investment and growth, and provides empirical corroborations. Below are from the introductory and concluding paragraphs:

Does Foreign Direct Investment Help Emerging Economies?

…The foreign capital has the potential to deliver enormous benefits to developing nations. Besides helping bridge the gap between savings and investment in capital-scarce economies, capital often brings with it modern technology and encourages development of more mature financial sectors. Capital flows have proven effective in promoting growth and productivity in countries that have enough skilled workers and infrastructure. Some economists believe capital flows also help discipline governments’ macroeconomic policies.

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FDI appears to help emerging economies develop. It complements the host country’s institutions and human capital. In many countries, however, barriers to FDI remain. These barriers may range from limits on foreign ownership and control to outright bans on FDI in select sectors, such as services (Elanor: and for Malaysia, just about in any other sectors). Reducing them may well be a way to speed up economic development. FDI benefits investors, to be sure, but it also pays dividends to the countries that attract it.

The indiscriminate forces of globalization do not recognize ethnicity or nationality. We are, after all, citizens of the world.

Elanor