The phenomenon of "resource curse" was discussed, which refers to the economic growth of resource rich countries often being lower than that of resource poor countries. Malaysia, as one of the countries that has successfully overcome the "resource curse," has transformed from a major tin mining region to an industrialized country primarily focused on manufacturing, maintaining a high rate of economic growth. The Malaysian government actively develops an export-oriented economy, constructs a "development oriented country" model, and successfully responds to the challenges of the decline of the resource industry and the oil and gas industry, becoming one of the few successful transformation cases among resource exporting countries.

An existing explanation for Malaysia breaking free from the 'resource curse'

Explored various explanations on how Malaysia can break free from the 'resource curse'. Scholars have put forward five main viewpoints: firstly, Malaysia has not truly escaped the "resource curse", as the government has invested capital in inefficient equality movements, leading to the middle-income trap; Secondly, liberal policies have promoted external investment and economic growth; Thirdly, industrial policies have balanced wealth distribution among ethnic groups and macroeconomic management; Fourthly, there are multiple factors, including resource endowment, investment rate, public investment, export-oriented industrialization policies, etc; The fifth is the influence of industrial policies and high-quality bureaucrats. Despite the existence of the middle-income trap and inefficient investment issues, the Malaysian government's economic policies are considered the key to breaking free from the 'resource curse'. The article further points out that the mismatched political and economic relationships between ethnic groups are the main reason for Malaysia to break free from the "resource curse". Ethnic politics runs through Malaysia's history, affecting political and economic activities. The government weakens the economic advantage of Chinese people through economic policies, enhances the economic status of indigenous groups, and reduces economic inequality and conflicts between ethnic groups.

Two ethnic politics, industrial alliances, and the 'resource curse': an analytical framework

Explored how Malaysia can break free from the "resource curse" through the unique interaction of ethnic politics and industrial alliances. The article first defines ethnic politics and industrial alliances, and analyzes how they affect national economic development. Ethnic conflicts are often instrumentalized to seek political power or resources, while the formation of industrial alliances is based on the income distribution effects of international factor flows. In Malaysia, the misalignment of ethnic political and economic status has a positive impact on breaking free from the "resource curse": firstly, the balance of economic status between ethnic groups limits the government's ability to acquire resource wealth; Secondly, economically advantaged groups will spontaneously resist the government's acquisition of more resources; Finally, this misplaced relationship prompts the country to enhance its level of economic diversification and reduce its dependence on resource industries. These factors worked together to help Malaysia avoid the negative impact of the resource industry and achieve stable economic growth.

Three ethnic politics and Malaysia's economic development

Malaysia's economic development is deeply influenced by ethnic politics, forming a unique development path. During the British colonial period, the prosperity of the tin mining industry led to the division of economic status among ethnic groups, and the Chinese formed a strong economic influence in industries such as tin mining. The British colonial policy exacerbated ethnic divisions, hindered ethnic exchange and integration, and shaped the basic ethnic political landscape of Malaysia after its founding. After the independence of Malaya, ethnic divisions and political and economic status were institutionalized, and UMNO attempted to establish a country dominated by Malays, advocating restrictions on non Malay citizenship rights and exacerbating the conflict between Malays and Chinese. In order to break free from colonial rule, UMNO adopted an independent agenda of "politics first, economy later", recognizing the economic interests of the Chinese in exchange for support, forming a divide between Malay political dominance but low economic status, and Chinese legal political status but high economic status.

Ethnic political factors in the development of industries in Malaysia

We discussed how Malaysia can successfully overcome the 'resource curse' by influencing its industrial development through ethnic political factors. The Malaysian government finds it difficult to control the wealth of the resource industry under the influence of ethnic politics, resulting in the resource industry not becoming a key focus of economic development, but shifting towards industry and commerce, giving preferential treatment to Malays, and forming differentiated competition and complementarity. The distrust of local Chinese capital by the Malaysian government has actually promoted a favorable business environment for foreign investment and increased its attractiveness to manufacturing capital from the United States and Japan, especially during the rapid development of the electronics industry. Malaysia has failed to establish a strong oil and gas resource industry alliance due to the influence of national capital, local interests, and incomplete petroleum nationalization process. The development of the Malaysian Resource Industry Alliance has been hindered, and the government has made manufacturing a key industry for development, forming a manufacturing industry alliance. The relatively developed manufacturing industry in Malaysia has reduced its dependence on the resource industry, forming an economic path dependence and avoiding the excessive impact of the resource industry on the national economy. The decline of Malaysia's tin mining industry and the reality of oil and gas reserves are also conducive to avoiding the 'resource curse'. Despite economic inefficiency and rent-seeking issues, under the diversified economic structure and ethnic political supervision, Malaysia's corruption and rent-seeking problems are controllable. The export-oriented manufacturing industry has a greater driving effect on the economy than the single resource export industry, allowing Malaysia to avoid the "resource curse".

Five concluding remarks

Malaysia's unique ethnic political environment and historical path have enabled it to avoid the resource curse. Due to the political and economic status differences between the Chinese and indigenous groups, Malaysia was unable to rely on resource exports in the early days of its founding and maintained a relatively free economic development model without experiencing the nationalization process of the resource industry. The government attaches great importance to improving the education level of indigenous people and developing the manufacturing industry, actively integrating into the global manufacturing value chain. Even though oil and gas resources were later discovered, the resource industry failed to challenge the manufacturing cluster, leading Malaysia onto a path different from other developing countries. Malaysia's experience shows that resource rich countries have the potential to break free from the resource curse if they steadfastly develop their industries and businesses instead of relying on resource exports, formulate and implement appropriate industrial policies.