ABSTRACT
This chapter contains a case study of Malaysia’s automotive industry development. It emphasizes the fact that autochthonous Malaysian capitalists in the automotive sector are widely incapable of competing in international markets and dependent on foreign direct investment and the know-how of multinational corporations. One reason refers to the political economy of state-business relations, which resulted in rent-seeking behavior and cronyism. The chapter provides empirical evidence for causal mechanisms that explain the connection between the institutional constellation of Malaysia’s government-business relations and the outcome of weak domestic capitalists. It aims to collect observable manifestations to scrutinize the mechanisms that constitute ethnic discrimination and technological backwardness. The chapter first highlights the government’s strategy to create national automotive champions before it illuminates Malaysia’s industrial policies toward the automotive sector by dividing its development into three phases. The chapter’s final part evaluates Malaysia’s automotive sector development and scrutinizes the performance of the country’s automotive industry and national car projects.
