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How to avoid middle income traps ? evidence from Malaysia

Author

Listed:
  • Flaaen, Aaron
  • Ghani, Ejaz
  • Mishra, Saurabh

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.

Suggested Citation

  • Flaaen, Aaron & Ghani, Ejaz & Mishra, Saurabh, 2013. "How to avoid middle income traps ? evidence from Malaysia," Policy Research Working Paper Series 6427, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6427
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    References listed on IDEAS

    as
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    10. Shekhar Aiyar & Romain A Duval & Damien Puy & Yiqun Wu & Longmei Zhang, 2013. "Growth Slowdowns and the Middle-Income Trap," IMF Working Papers 13/71, International Monetary Fund.
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    12. Nicola Spatafora & Rahul Anand & Saurabh Mishra, 2012. "Structural Transformation and the sophistication of Production," IMF Working Papers 12/59, International Monetary Fund.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. How to avoid middle-income traps? Evidence from Malaysia
      by ? in VoxEU.org on 2013-07-22 06:00:00

    Citations

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    Cited by:

    1. King Yoong Lim, 2015. "Industrial Transformation with Heterogeneous FDI and Human Capital," Centre for Growth and Business Cycle Research Discussion Paper Series 213, Economics, The Univeristy of Manchester.
    2. Glawe, Linda & Wagner, Helmut, 2016. "China in the Middle-Income Trap?," MPRA Paper 73336, University Library of Munich, Germany.
    3. Pierre-Richard AGENOR, 2016. "Caught in the Middle? The Economics of Middle-Income Traps," Working Papers P142, FERDI.
    4. Helmut Wagner, 2015. "Structural Change and Mid-Income Trap – Under which conditions can China succeed in moving towards higher income status?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 12(2), pages 165-188, December.
    5. Aaron Flaaen & Ejaz Ghani & Saurabh Mishra, 2013. "How to Avoid Middle-Income Traps?," World Bank Other Operational Studies 22602, The World Bank.
    6. Bill Battaile & Saurabh Mishra, 2015. "Transforming Non-Renewable Resource Economies (NREs)," IMF Working Papers 15/171, International Monetary Fund.
    7. Pierre-Richard AGENOR, 2016. "Caught in the Middle? The Economics of Middle-Income Traps," Working Papers P142, FERDI.
    8. Gill,Indermit S. & Kharas,Homi, 2015. "The middle-income trap turns ten," Policy Research Working Paper Series 7403, The World Bank.
    9. Fernando Gabriel Im & David Rosenblatt, 2015. "Middle-Income Traps: A Conceptual and Empirical Survey," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 6(03), pages 1-39.
    10. Kumagai, Satoru, 2014. "The middle-income trap from the viewpoint of trade structures," IDE Discussion Papers 482, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    11. 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.

    More about this item

    Keywords

    Economic Theory&Research; Banks&Banking Reform; Emerging Markets; Labor Policies; Economic Conditions and Volatility;

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