How to Avoid Middle Income Traps? Evidence from Malaysia
Year: 2013
Type: report
Abstract: Malaysia's structural transformation from low to middle income is a success story, making it one of the most prominent manufacturing exporters'in the world. However, like many other middle income economies, it is squeezed by the competition from low-wage economies on the one hand, and more innovative advanced economies on the other. What can Malaysia do? Does Malaysia need a new growth strategy? This paper emphasizes the need for broad structural transformation; that is, moving to higher productivity production in both goods and services. This paper examines productivity growth for Malaysia at the sectoral level, and constructs several measures of the sophistication of goods and services trade, and puts these comparisons in a global context. The results indicate that Malaysia has further opportunities for growth in the services sector in particular. Modernizing the services sector may provide a way out of the middle income trap, and serve as a source of growth for Malaysia into the future.
Authors: Aaron Flaaen, Ejaz Ghani, Saurabh Mishra
Institutions: World Bank, University of Michigan, International Monetary Fund
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1912200724