This is the 4th largest economy of South East Asia, Malaysia. The country which achieved some remarkable growth. Also a country that is stuck in the middle income trap.
If you look, since its formation in 1963, Malaysia's economic performance has been one of Asia's best. The gross domestic product grew by an average of 6.5% per year from 1957 to 2005. Till the 70s the Malaysian economy was highly dependent on agriculture and commodities exports. But after that they began a transition towards a more multi-sector economy. Since the 80s the industrial sector has led Malaysia's growth. High levels of investment played a significant role in this. With Japanese investment, heavy industries flourished, and in a matter of years the Malaysian exports became the country's primary growth engine. The country consistently achieved more than 7% GDP growth along with low inflation in the 1980s and the 1990s.
You see Malaysia is one the strongest, most diversified, and fastest growing in Southeast Asia. But still not among the high income countries, and stuck in a middle income trap.
Well After the Asian financial crisis of 97-98, Malaysia’s economic engine is slowing. Private investors have taken a back seat. Since the crisis, aggregate investment as a share of GDP in Malaysia has continued to decline, with private investment remaining stagnant due to several factors. And the country's economic growth is somehow stuck in the middle income trap. That means the country is struggling to transform itself from upper middle income to higher income status.
This shows, only export led strategies might not be sufficient enough for many developing countries for sustainable economic development. As we know, export-led growth could increase the reliance of developing countries on the developed world. While decreasing the domestic market growth. Many export-dependent developing countries started tweaking their growth strategies especially after external demand for their exports dried up on account of the current global financial and economic crisis. Though Malaysia’s growth strategy had started emphasizing domestic demand since about a decade back, it still remains largely dependent on external demand for its economic growth.
Watch the full video to get a better insight.

#malaysianeconomy #middleincometrap

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