Neoliberalism, financialisation and the dynamics of capital accumulation in Malaysia

Jeff Tan, School of Oriental and African Studies

Abstract
One of the main features of neoliberalism as a system of accumulation is financialisation. This refers to the increasing flows of capital, and in particular portfolio investment, which has in turn become an important source of profits for both financial and non-financial corporations. A large body of literature has looked at how large unregulated short-term capital flows can be potentially destabilising, leading to financial crises. Much less research has been conducted on the affect of these capital flows on the dynamics of accumulation in the recipient country, in particular its impact on the investment preferences of domestic firms. In the context of a developing country, these financial flows can increase the capital stock or simply finance shorter-term, speculative activity, depending on the structure of incentives for and preferences of domestic firms. This paper will examine the impact of increased portfolio investments in Malaysia on a macroeconomic and company level, looking at capital flows and investment sectors on an aggregate and firm level. In the process it will seek to identify the main drivers and beneficiaries of financialisation in the context of neoliberalism and globalisation.
Key words: Neoliberalism, financialisation, Malaysia, capital flows, portfolio investment