"Ethnic Politics and Economic Activity" : A comparison of Sri Lanka and Malaysia

Abstract

Sri Lanka and Malaysia are basket cases of ethnic preference policies that have resulted in vastly different socio-economic outcomes. Despite a vast and growing literature on ethnic tensions, the economic dimension of the problem remains largely unexamined; Analyses on ethnic tensions have inevitably led to a misleading impression that both countriesa?? ethnic tensions are purely an a??ethnic issuea?? and that it has to be analyzed within the context of ethnic disparities of the country. This study addresses these misconceptions. The aim of this study is twofold: first, to analyse how the economic policies can act as a stimulant to ethnic tensions, using both Sri Lanka and Malaysia as case studies, and second, to identify appropriate economic policies to reduce ethnic tension in multi-ethnic developing countries. The study shows that a high degree of economic openness ensures high growth and disciplined government that is turn set the pre-conditions for ethnic peace.