Explaining a ‘development miracle’: poverty reduction and human development in Malaysia since the 1970s

This paper provides a systematic assessment of the alleged exceptionality of Malaysia’s development progress and its likely explanations, in a comparative perspective. Using cross-country regressions and aggregate indices of education, health, poverty and gender equality outcomes, we offer three findings. First, we provide evidence supporting the hypothesis that Malaysia’s human development progress has been exceptional compared with that of countries with a similar level of economic development, primarily for the 1970s and 1980s, so showing that progress has early origins. Next, we show that such progress is explained by a combination of income-mediated and support-led mechanisms, including Malaysia’s early emphasis on education and health inputs and infrastructure development. Finally, we argue that an early advantage in state capacity, vis-à-vis other countries of similar income level, may be at the origin of Malaysia’s successful implementation of poverty-reduction and growth-enhancing policies.