Cause Analysis And Policy Responses Of Malaysia’s Falling Into Middle-income Trap

"Middle-income trap" is a common strategic challenge for transition countries in the process of economic and social development. Malaysia is also facing the same pressure and difficulty. Since entering into the rank of upper middle-income countries in1996, it has been difficult for Malaysia to reach the boundary line of high income level. Malaysia has been trapped in the "middle-income trap" for a long time. In the current economic development of Malaysia, structural imbalance of income distribution, sluggish human resource development, weak capacity of independent innovation, slow process of democracy, remarkable corruption and other issues significantly retard Malaysia’s transformation of the economic and social structure. Thus, it will be difficult for Malaysia, if not eliminating these obstacles, to escape the "middle-income trap", and to enter the rank of high-income countries.Recently, the government of Malaysia has adopted a series of policies and measures to positively respond the challenge of "middle-income trap", in order to get rid of the "middle income trap", and realize national vision of building Malaysia into a high-income country in2020. The government of Malaysia launched the plans of economic, political and social transformation, timely adjusted the national policies of science and technology, promoted the establishment of talent incentive mechanism, deepened the reform of the financial sector and relaxed the restrictions on foreign capital, hoping thereby to eliminate the obstacles in the transformation of economic and social structures, reactivate Malaysia’s economy, break through the bottleneck of economic development, and finally get rid of the "middle income trap", which has perplexed Malaysia for nearly20years.In2010, China’s GNI per capita achieved$4240. According to the new standard released by the World Bank, China had formally entered the rank of upper middle-income countries and began to face the challenge of "middle-income trap". Malaysia is geographically and culturally close to china. Both of Malaysia and China are at a crucial stage of economic and social structure adjustment. Therefore, studying the Malaysia’s transformation practice of dealing with the "middle income trap" and learning the experience and lessons of Malaysia’s transformation of the economic and social structure have significant reference for China to expedite the transformation of economic development mode and successfully avoid the "middle-income trap".