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The Leap of the Tiger: How Malaysia Can Escape the Middle-Income Trap

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  • Reda Cherif
  • Fuad Hasanov

Abstract

Only a few European economies and Korea and Taiwan Province of China reached high-income status during 1970-2010. Malaysia’s real income per capita increased to 26 percent of the U.S. level in 2010 from 20 percent in 1970. Despite relatively strong growth and a substantial improvement in export sophistication, Malaysia’s total factor productivity lagged behind that of Korea and Taiwan Province of China. We argue that what characterizes their experience in contrast to Malaysia’s is the creation of technologies by domestic firms and a push to leapfrog to the technological frontier at an early stage of development.

Suggested Citation

  • Reda Cherif & Fuad Hasanov, 2015. "The Leap of the Tiger: How Malaysia Can Escape the Middle-Income Trap," IMF Working Papers 2015/131, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2015/131
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    Cited by:

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    3. Robert H. Wade, 2018. "The Developmental State: Dead or Alive?," Development and Change, International Institute of Social Studies, vol. 49(2), pages 518-546, March.
    4. Yap, Xiao-Shan & Truffer, Bernhard, 2019. "Shaping selection environments for industrial catch-up and sustainability transitions: A systemic perspective on endogenizing windows of opportunity," Research Policy, Elsevier, vol. 48(4), pages 1030-1047.
    5. International Monetary Fund, 2015. "Republic of Estonia: Selected Issues," IMF Staff Country Reports 2015/337, International Monetary Fund.
    6. K. Buysse & E. Vincent, 2015. "Factors explaining emerging economies’ growth slowdown," Economic Review, National Bank of Belgium, issue ii, pages 61-79, september.
    7. 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.
    8. Jostein Hauge, 2020. "Industrial policy in the era of global value chains: Towards a developmentalist framework drawing on the industrialisation experiences of South Korea and Taiwan," The World Economy, Wiley Blackwell, vol. 43(8), pages 2070-2092, August.
    9. Dieppe, Alistair & Gilhooly, Robert & Han, Jenny & Korhonen, Iikka & Lodge, David, 2018. "The transition of China to sustainable growth – implications for the global economy and the euro area," Occasional Paper Series 206, European Central Bank.
    10. Wade, Robert H., 2018. "The developmental state: dead or alive?," LSE Research Online Documents on Economics 87356, London School of Economics and Political Science, LSE Library.
    11. Pierre-Richard AGENOR, 2016. "Caught in the Middle? The Economics of Middle-Income Traps," Working Papers P142, FERDI.
    12. Xiao-Shan Yap & Bernhard Truffer & Deyu Li & Gaston Heimeriks, 2020. "From knowledge-based catching up to valuation focused development: Emerging strategy shifts in the Chinese solar photovoltaic industry," Papers in Evolutionary Economic Geography (PEEG) 2059, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Dec 2020.
    13. Linda Glawe & Helmut Wagner, 2016. "The Middle-Income Trap: Definitions, Theories and Countries Concerned—A Literature Survey," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 58(4), pages 507-538, December.
    14. Leonard Lam, Fong Litt & Law, Siong Hook & Azman-Saini, W. N. W. & Khair-Afham, M. S. M. & Goh, Lim Thye, 2022. "High Technology Trade, Innovation and Economic Growth: Evidence from Aggregate and Disaggregate Trade Products," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(1), pages 15-31.
    15. Donatella Saccone & Matteo Migheli, 2022. "Free to escape? Economic freedoms, growth and poverty traps," Review of Development Economics, Wiley Blackwell, vol. 26(3), pages 1518-1554, August.
    16. Richard Harrison & William Scheela & P. C. Lai & Sivapalan Vivekarajah, 2018. "Beyond institutional voids and the middle-income trap: The emerging business angel market in Malaysia," Asia Pacific Journal of Management, Springer, vol. 35(4), pages 965-991, December.
    17. Semanur SoyyiÄŸit, 2019. "The Relationship Between Middle Income Trap and Structural Transformation: The Case of Selected Countries," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 11(4), pages 217-235, December.
    18. Robert H Wade, 2016. "Industrial Policy in Response to the Middle-income Trap and the Third Wave of the Digital Revolution," Global Policy, London School of Economics and Political Science, vol. 7(4), pages 469-480, November.
    19. Stöllinger, Roman, 2021. "Testing the Smile Curve: Functional Specialisation and Value Creation in GVCs," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 93-116.

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