The Leap of the Tiger: How Malaysia Can Escape the Middle-Income Trap
IMF Working Papers, June 23, 2015
Source details
- Canonical URL
- The Leap of the Tiger: How Malaysia Can Escape the Middle-Income Trap
Other formats
Bibliographic details
- Authors: Reda Cherif, Fuad Hasanov
- Published: June 23, 2015
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513556017.001
Summary
- 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.
- The authors argue that what characterizes Korea’s and Taiwan Province of China’s 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.
Key findings and evidence
- Comparative performance:
- High-income attainment during 1970-2010: only a few European economies plus Korea and Taiwan Province of China.
- Malaysia: real income per capita rose from 20 percent of the U.S. level in 1970 to 26 percent in 2010.
- Productivity and technology:
- Malaysia exhibited a substantial improvement in export sophistication.
- Malaysia’s total factor productivity lagged behind Korea and Taiwan Province of China.
- The distinguishing factor for Korea and Taiwan Province of China was domestic firm-driven technology creation and early-stage leaps to the technological frontier.
Policy implications and recommendations (as argued)
- Encourage domestic firm capability to create technologies rather than relying solely on adoption.
- Promote strategies that enable firms to leapfrog to the technological frontier at an early stage of development.
- Foster conditions that translate export sophistication gains into sustained total factor productivity growth.
Subject coverage and keywords
- Subject: Economic sectors, Exports, Income, International trade, Manufacturing, National accounts, Production, Productivity, Technology
- Keywords: Asia and Pacific, auto parts firm, electronics firm, Exports, firm development, firm Hyundai, firms in the electronics sector, Global, global brand, government intervention, growth, Income, innovation, invested company share, local firm, Manufacturing, middle-income trap, productivity, spin-off firm, technology, WP