Malaysia and Sri Lanka: Dilemmas of the Development Process

Development, what is it? Why have some countries achieved it while others are still struggling? Which set of policies would best complement this process? These are questions that economists have debated for years. Recently, a public seminar commemorating 60 years of Japan – Sri Lanka diplomatic relations attempted to answer some of these questions from a Japanese and East Asian perspective. The comments made by one of the two guest speakers, Prof. Asanuma, were particularly interesting where he compared the Malaysian and Sri Lankan development experience in an attempt to understand where Sri Lanka went wrong.


image courtesy www.nationalcapitals.netThe actual growth process that Malaysia is currently undergoing is remarkable and the country is now moving to the next phase of development which focuses on building a ‘knowledge economy’. Analysis of their development process can be found in many books and articles published by vario

us authors. However, this article discusses the relevance of a Malaysian comparison to Sri Lanka, given the numerous differences in context; differences that may very well have been key factors in changing the course of these two countries.


Malaysia and Sri Lanka had broadly similar economic and socio-political conditions after gaining independence. Both countries had roughly similar per capita income; both consisted of multi-ethnic communities; and both experienced conflicts that had strong ethnic dimensions. In addition to this, Malaysia and Sri Lanka both had an abundance of available land and were exporters of primary commodities in the early stages of post-colonial era development. These seemingly similar aspects between the two countries are why many people find it suitable to compare their development experiences.


Effects of Conflict


Although the conflicts experienced by both countries are often posed as a similarity between them, there are also noteworthy differences related to them. The conflicts in Malaysia were mostly in two periods – 1948 and 1969 – while in Sri Lanka, the conflict lasted from 1983-2009 – nearly three decades. However, Prof. Asanuma argued that the conflict in Sri Lanka cannot be considered as a causal factor in Sri Lanka’s development process as the country did manage to maintain a considerable level of growth even during the conflict, arguing that other factors have affected the countries growth process more than the 30 year conflict. It is true that the conflict is sometimes used as a ‘scapegoat’ by those who lament Sri Lanka’s economic ills. Yet, the impact of a 30 year war and the impact of its conclusion on the prospects of the economy cannot be overlooked.


Many of the East Asian countries experienced external threats during their growth process and this was said to be a crucial factor in their development process. It helped justify ‘economic development at any cost’ and enabled them to build the momentum and public support needed to forge ahead with the strong and bold policy reforms needed for economic development (see for example, Jayasinghe, 2008). However, during the 30 year period of war in Sri Lanka, ways and means by which the country could end the armed conflict was the first and foremost priority. While East Asian countries were able to use external threats to build the public impetus needed for growth, Sri Lanka struggled with complex internal divisions caused by the conflict that made it increasingly difficult to get the public to rally around bold economic reforms. Economic growth and national development, in the minds of many Sri Lankan citizens, took a secondary place.


External Spillovers?


Another point raised during the seminar was the fact that Malaysia, like many other East Asian countries, benefitted from the external spillovers of its neighbouring countries like Japan and Korea. There is a high level of regional integration between East Asian countries that allows them to maximize on these externalities. Unfortunately for Sri Lanka, integration between South Asian countries is hindered by security concerns and political conflicts making regional integration to the extent of East Asia very tricky. However, Sri Lanka cannot make this as an excuse to not take advantage of the rapid growth of India and some other neighbours. Taking advantage of external spillovers must take place even while regional integration proceeds at a lacklustre pace.


Consistent Policies


The Malaysian economy also had a political commitment towards achieving growth with the support of the country’s technocrats. It can even be argued that any shifts in industrial policies in Malaysia were more often than not, geared towards addressing a need of the economy that presented itself as a potential crisis in the future. For example, the under-representation of Malays, the resources crunch in the 1970s, debt crisis in the 1980s, all gave a signal to the government to move ahead with new industrial policies (see for example, Yusof and Bhattasali, 2008). Currently, Malaysia is attempting to transform towards a knowledge-based economy. The country has identified that it is largely dependent on a limited range of manufactured products which are now facing competition from low cost countries. The knowledge-based economy is expected to help diversify the Malaysian economy and avoid this impending economic problem. In addition to this, most of the core ideas in some Malaysian policies have lasted beyond the political regime of the Prime Minister who initially introduced the policies. For example, most of Dr. Mahathir Mohammed’s policy prescriptions continued to be carried out even after he left office. In Sri Lanka however, the ad-hoc changes in industrial policies have, more often than not, been a result of changes in government that swing between the two main political parties with two different political ideologies. This has made it difficult for the country to maintain any form of consistency in economic policy over the past few decades.


Lessons Learnt


As a result of these differences, and indeed many others, Malaysia has experienced significant economic growth while Sri Lanka lags behind. Comparing development processes and looking into strategies by which other countries achieved rapid growth is undoubtedly a good start. There are many lessons to be learnt from their experiences and many ideas that Sri Lanka could take from them. But a word of caution must be added at this point. It was not too long ago that developing countries were all following neo-liberal policies set out by the West – the policies that supposedly led to their development. Now the focus is on East Asia and its development models. It is good to know how each of these countries achieved the things they did. But it is equally important to keep in mind that just like the similarities between country contexts that would suggest that many policies would be applicable to both countries, there are also as many differences that would make the same policies inappropriate. So even though East Asian development models can be considered closer to home than Western ones, we must keep in mind that, South Asia, and particularly Sri Lanka are still very different in many respects.



Jayasinghe, Prabhath (2008) “Cumulative Forces behind the Economic Development in East Asia and Sri Lanka’s Development Experiences”, in Senanayake, S. et al. (eds.) Development Perspectives: Growth and Equity in Sri Lanka – Festschrift in Honour of Professor W.D. Lakshman, Colombo: Department of Economics, University of Colombo.

Yusof, Z. and D. Bhattasali, (2008), Economic Growth and Development in Malaysia: Policy Making and Leadership, International Bank for Reconstruction and Development and World Bank, Washington D.C.