Since taking office last year, Malaysia’s new Prime Minister Najib Tun Razak on the hard, through the reform of trouble trying to get rid of nearly 20 years of Malaysia’s “middle income trap” and regain Malaysia in 1997 before the Asian financial crisis, the regional economy “leader” status. In a series of reform initiatives and programs, announced this year was undoubtedly the best system, the “new economic model program”, the program embodies the overall economic strategy, and in Malaysia the next 10 years the importance of structural reform and economic development strategy guidance documents.

And “middle income trap” set out accompanied by 20

The so-called “middle income trap” refers to when a country’s per capita income to achieve middle-level, as difficult to achieve effective change in the way of economic development, income distribution gap occurs, human capital accumulation is slow, hampered the process of urbanization, industrial upgrading difficult and the fragile financial system and a range of issues, leading to lack of sustained growth momentum and frequent social conflicts, which occur a state of economic stagnation.

From the perspective of world economic history, there have been two across the “middle income trap” successful “case.” First, Japan and South Korea were in the last century through the 60’s and 70’s pattern of strategic adjustment of national income distribution and industrial transformation and upgrading policies, and successfully get rid of the “middle income trap” and “curse” into a “high-income countries” list; Another is the Eastern European countries join the EU before the adoption of the “legal” and “market” reforms, the transformation of the progressive realization of economic and social development, and ultimately from the “middle income trap” to get out out.

Can be seen from the historical experience of the successful removal of the “trap” of the country have a common characteristic, that is change and transformation, only economic system reform and economic development to change the way to save the trouble of “back country” in crisis being.

However, including Malaysia, many Southeast Asian countries and Latin American countries including Brazil, the long-term into the “middle-income trap.”

As World War II on behalf of one of the emerging market countries, Malaysia has the typical “middle-income trap” features of the country. After independence in 1957, Malaysia began to catch up on the economy of developed countries. In 1970, the Government introduced a new economic policy, the economic growth momentum in the shift from dependence on primary commodity sector to rely on the manufacturing sector, and success in the 90s of last century into “middle-income country” ranks. However, since 1992, especially after the Asian financial crisis, Malaysia’s economic growth to gradually slow down economic growth from 1990 to 1997 the average annual 9.1%, down to 2000 to 5.5% in 2008, economic development opportunities to great difficulties.

“The new economic model program” in respect, in the “middle income trap” of the troubled, the Malaysian economy faces five problems: First, as a “small economies”, opening up higher, causing the domestic economy several external shocks; Second, the Asian financial crisis, the lack of long-term economic growth momentum; Third, with the total long-term economic expansion, growing gap between rich and poor; 4 gradually base the growth of economic stagnation, poor access to “high income” countries ranks; five domestic economic and social problems, the implementation of reforms and gradually increasing the difficulty.

From the “program” the crux of the Malaysian domestic economy analysis point of view, five issues, four are directly behind the “middle income trap” related. In fact, from 1992 into the “middle-income countries,” since a long time, Malaysia’s per capita GDP level of Du difficult to break through “the boundary line of the global high-income”, “middle income trap” plight has become Malaysia future economic development, a major obstacle.

Thus, with the “middle income trap” accompanied by 20 set, a logical starting point for future reform in Malaysia and the new economic model of the breakthrough. It is precisely because of Malaysia the “program” and the reality grasps the basic core is the reform and restructuring.

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