| Abstract: | Beginning in 1971, Malaysia took unprecedented steps to improve the welfare of ethnic Malays vis-à-vis the country's large Chinese minority. The programs included quotas in education, employment, and ownership, as well as a variety of subsidies, credit schemes, and political measures. The circumstances were favorable: The disadvantaged ethnic group was a majority and held the political reins, and soaring export prices generated much new growth to redistribute. But enormous efforts at “affirmative action” led to only marginal changes in the interethnic distribution of income. Malaysia's new policies reduced racial inequalities less than one might have hoped, but they also had fewer bad effects on economic efficiency and political stability than one might have feared. |
