The Beginnings of Crony Capitalism: Business, Politics and Economic Development in Malaysia, c. 1955–70

The term ‘crony capitalism’ describes the close relationship between the state and big business in contemporary Southeast Asia. Yoshihara argued in 1988 that cronyism produced an entrepreneurially weak, ersatz capitalism. Crony capitalists were ‘private-sector businessmen who benefit[ed] enormously from close relations’ with leading officials and politicians, obtaining ‘not only protection from foreign competition, but also concessions, licences, monopoly rights, and government subsidies’. Yoshihara's thesis has been subject to some criticism, but, in summarizing that debate, Ian Brown states that ‘there are…substantial areas of the South-East Asian political-economic landscape where government and business remain bound to the protection of inefficient vested interest, to the defence of monopoly and preference, and where speculations and short-term profit-taking are rife’. Entrepreneurial weaknesses in Southeast Asia appeared fully exposed by the financial crisis of 1997, when the economies of the region could not withstand the cruel buffetings of the international economy.