Malaysia: A Success Story Stuck in the Middle?

Abstract

This study examines the Malaysia development record in the context of widespread concerns that the country, and others like it, may encounter major difficulties in graduating to the ranks of high‐income economies. It stresses the country’s rapid socioeconomic development, built on openness, reasonably competent macroeconomic management and attention to equity issues. It then investigates the country’s significant slowdown in investment and economic growth since the late 1990s, and asks whether this trend is related to the more general graduation issue. Our principal conclusion is that the slowdown has less to do with the problem of graduation and more to do with a set of country‐specific institutional and political economy challenges. Thus, the current concern within the country that it is in some sense ‘stuck in the middle’ points to the need for a set of major policy reforms to accelerate growth.

Caught in the Middle? The Economics of Middle‐income Traps

“…Even though the average number of years of schooling increased dramatically between 1990 and 2010, PISA scores in mathematics, reading, and science, put the country's rankings at 58, 55, and 59, respectively, out of 65 countries, in 2012. Poor quality of human capital is also one of the key issues for Malaysia (see Hill et al ., , and Flaaen et al ., ). Indeed, although a net labor importer, Malaysia remains a net skills exporter, with growing numbers of professionals migrating to Singapore and other industrialized countries.…”

“…Descriptive studies on middle‐income traps include broad cross‐country comparisons by the World Bank () and more specific country studies such as Hill et al . (), Flaaen et al . (), Agénor and El Aynaoui (), and Cherif and Hasanov ().…”

“…Growth has slowed significantly as a result. After growing at an annual average rate of 5.2% per capita during the period 1970–1979, growth in Malaysia slowed to 3.8% during the period 1980–1999 and to 3.0% during 2000–2010 (Hill et al ., , table 2). In Thailand, the annual growth rate per capita slowed from an average of 5.3% during 1970–1989 to 4.1% during 1990–1999 and 3.4% during 2000–2010 (Hill et al ., op.…”

Producing Migrant Domestic Work: Exploring the Everyday Political Economy of Malaysia's ‘Maid Shortage’

“…The demand for low cost foreign domestic workers has emerged as a core feature of the 'stuck' in a middle-income trap (Hill, Yean and Zin, 2012;Cherif and Hasanov, 2015).…”

Land and Disaster Management Strategies in Asia

“…Introduction of industrial policy was in part a result of Mahathir's Vision 2020 for Malaysia to become a highly developed nation by the year 2020 (Hirschman 2013). As a result, it causes a contraction in the agriculture sector and hence affects sustainable food security (Hill et al 2012). As a result, it causes a contraction in the agriculture sector and hence affects sustainable food security (Hill et al 2012).…”