Are Emerging South-East Asian Economies Caught in a Middle-income Trap? Case: Malaysia. Paradoxes in Provision of Higher Skilled Labour

Abstract

In the 1990s, emerging economies like Malaysia and Thailand are expected to become high-income economies over a 20 years period, but the transformation process has not been as smooth as anticipated. In particular, there have been problems in providing higher skilled labour with the demanded qualifications from higher educational institutions. Taking Malaysia as our case, we examine these problems. Malaysia is chosen because it has in the last decade followed in the footprint of development success stories like South Korea, Taiwan and Singapore and has like them invested a great deal in higher education with the aim at providing a well-educated and creative workforce. Furthermore, it has been highly focused on becoming a high-income economy. The question is whether such an expansion of higher education is a lever for Malaysia to become a high-income economy, to enable it to transform out of the middle-income trap. We examine this question through an analysis of statistical data, government documents and field research on higher education. The analysis shows that Malaysia's massive investment in higher education has not brought it to a high-income economy status. It has created the potential to get out of the middle-income trap. But there are many complex and complicated political and governance problems that need to be handled in the transformation process, for instance, those relating to supply and demand mismatch, mass university dilemma between quantity and quality, centralisation vs. decentralisation and governance reform problems.