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The elusive quest for high income status—Malaysia and Thailand in the post-crisis years

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  • Sen, Kunal
  • Tyce, Matthew

Abstract

Both Malaysia and Thailand were seen to be part of the miracle growth economies of East Asia and fast moving into high income status in the early 1990s. Following the Asian Financial Crisis (AFC) of the mid 1990s, both countries have observed prolonged growth slowdowns. In this paper, we offer a political economy explanation of the growth slowdown in Malaysia and Thailand in their post AFC phases. We argue that the nature of the political settlement in these two countries determined a growth strategy that was predicated on offering open deals in the export-oriented manufacturing sector that were accessible to most firms, while at the same time, offering closed deals to politically connected firms in the natural resource and services sectors. As the political settlement moved to a vulnerable authoritarian one in both countries, such a dualistic deals strategy became patronage based over time and detrimental to growth.

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  • Sen, Kunal & Tyce, Matthew, 2019. "The elusive quest for high income status—Malaysia and Thailand in the post-crisis years," Structural Change and Economic Dynamics, Elsevier, vol. 48(C), pages 117-135.
    • Handle: RePEc:eee:streco:v:48:y:2019:i:c:p:117-135
    DOI: 10.1016/j.strueco.2017.11.007
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    Cited by:

    1. Fumitaka Furuoka & Kiew Ling Pui & Chinyere Ezeoke & Ray I. Jacob & Olaoluwa S. Yaya, 2024. "Growth Slowdowns And Middle-Income Trap: Evidence From New Unit Root Framework," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 69(01), pages 461-477, March.
    2. Yaya, OlaOluwa S & Vo, Xuan Vinh & Adekoya, Oluwasegun B., 2021. "Convergence among themselves and Middle-income trap of South-East Asian Nations: Findings from a New approach," MPRA Paper 109372, University Library of Munich, Germany.
    3. Upalat Korwatanasakul, 2023. "Thailand and the Middle-Income Trap: An Analysis from the Global Value Chain Perspective," PIER Discussion Papers 202, Puey Ungphakorn Institute for Economic Research.
    4. Furuoka, Fumitaka & Pui, Kiew Ling & Ezeoke, Chinyere Mary Rose & Jacob, Ray Ikechukwu & Yaya, OlaOluwa S, 2019. "Growth Slowdowns and Middle-Income Trap: Evidence from New Unit Root Framework," MPRA Paper 98672, University Library of Munich, Germany.

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