Has Malaysia really escaped the resource curse? A closer look at the political economy of oil revenue management and expenditures

Malaysia has been widely cited as belonging to a group of developing countries which has escaped the resource curse. No doubt its inclusion in this group has been based on its impressive growth record prior to the Asian financial crisis, and its achievements on poverty alleviation and economic diversification. Since the Asian financial crisis however, growth rates have slowed, the economy has experienced premature deindustrialisation and oil and gas revenues have become the major source of financing the budget, casting doubts on whether Malaysia has in fact been untouched by the resource curse. The paper concludes by examining the policy implications of the findings. •This article examines the management and expenditures of oil revenues in Malaysia.•The findings are explained from a political economy perspective.•It is contended that Malaysia has not evaded the resource curse.•Policy changes in resource management is needed to escape the middle income trap