South-east Asian economies risk 'middle income trap'

Abstract

Subject Economic development in South-east Asia and the 'middle income trap'. Significance Indonesia, Malaysia, the Philippines, Thailand and Vietnam will struggle to transition to being high-value economies due to lagging structural reforms that make it difficult to compete with both low-cost and technologically advanced nations. There is evidence that Thailand and Malaysia are already in the 'middle income trap', and Vietnam may become another entrant. Impacts To compete in global markets, the five economies will need more public and private investment in innovation. Broadening industrial bases will create opportunities for technology and logistics firms, among others. Ineffective political systems and political instability could further block badly-needed structural changes.