States, market reforms, and rents : the political economy of telecommunications reform in Malaysia and the Philippines

Abstract

This dissertation examines rent-seeking, market reform, and the state capacity in Malaysia and the Philippines. The Philippine state has been characterized as weak and captured by an influential oligarchic class. Conversely, the Malaysian state has been classified as strong and, by some, developmental. In spite of this difference, rent-seeking and patronage networks are prevalent in both countries, and both have adopted market liberalisation over the last twenty years. The key research questions are: • How does the strength or weakness of the state affect the possibility and sustainability of policy reform? • To what extent is reform affected by the nature of groups that support it? • Does market liberalisation invariably remove rents? To address these questions, the dissertation focuses on the telecommunications sector, one of the first to be liberalised in both countries. Using a political economy approach, the dissertation considers how the reform of the telecommunications sector took place and what outcomes it had in each country. Three interrelated arguments are put forward. First, the dissertation challenges conventional depictions of the Malaysian and Philippine states. Despite the weakness of the Philippines state, reform occurred through a coalition for reform that out-manoeuvred vested interests. In Malaysia, although considered a strong state, patronage and rent-seeking played key roles in policy adoption and implementation. Second, the nature of groups supporting reform shape policy implementation and its outcomes. In Malaysia, lobbying for liberalisation came from rent-seekers who were aware of the benefits to be obtained. In the Philippines, by contrast, the coalition favouring liberalisation did not benefit directly from market entry. Third, the study argues that market reforms do not invariably remove rents. While telecommunications liberalisation removed monopoly rents in the Philippines, it created new ones in Malaysia. Show more