World Bank projections in 2018 indicate that Malaysia is likely to transition from an upper-middle income economy to a high-income economy within the next 3-5 years as high rates of growth continue to propel average incomes upwards. This graduation will be an important marker in Malaysia’s development journey, as the country has witnessed a transformation in living standards within a generation, reducing dollar-a-day poverty to just a fraction of one percent of the population. It also, perhaps, will put to rest longstanding fears that Malaysia is at risk of becoming stuck in the “middle income trap”.
Yet, the transition to high-income country status also raises a number of questions in terms of both the quality of growth, and its sustainability—especially as Malaysia increasingly looks to compare itself with high-income rather than upper middle-income comparators. And, despite high rates of economic growth, there is a growing sense that the aspirations of Malaysia’s middle-class society are not being met, including with regard to the creation of a sufficient number of well-paying and otherwise high-quality jobs. Concerns over the extent to which the proceeds of growth are being shared between the top and bottom ends of the income distribution are also becoming more apparent. And, as the country exits that growth period when factor accumulation was a key driver, and increasingly looks towards more knowledge-intensive and productivity-driven growth, closer to the technological frontier but with an aging society, it is clear that a different set of policies and institutions might be needed for a high-income Malaysia.
Household data for Malaysia show that over the last fifteen years incomes have been sharply increasing, inequality decreasing, and inequality between groups also decreasing. Despite this, there is anecdotal evidence of a great deal of dissatisfaction with levels of well-being, and with the quality of governance. And this dissatisfaction is difficult to capture with the available quantitative data. This puzzle was the motivation behind a qualitative research study that provided background material for the 2019 Malaysia Economic Monitor (MEM), and also as a stand-alone study to inform a flagship World Bank report on Malaysia’s High-Income Transition.
The study captured major differences region and ethnicities. Fifty-six focus group discussions (FGDs) were conducted spread over three regions – the Greater Kuala Lumpur region (which has 20% of the Malaysian population), Terengganu (to represent the eastern and more rural part of the peninsula), and Sabah to represent Borneo. In the Kuala Lumpur region, FGDs were conducted separately with Malay, Chinese and Indian populations.
Monica Biradavolu was hired as a consultant to lead the qualitative data collection and analysis. She worked with Prof. Niaz Asadullah of the Department of Economics at the University of Malaya, and Dr. Kenneth Simler and Dr. Vijayendra Rao of the World Bank.
- Designed the study including the research questions, site selection, sampling and recruitment framework, methodology, data management and data analysis plans
- Developed focus group discussion guides
- Developed study protocols
- Trained the data collection team
- Analyzed data
- Produced reports
- Presented key findings to the Ministry of Economic Affairs