Malaysia's Economic Growth and Transition to High Income : An Application of the World Bank Long Term Growth Model
This paper studies economic growth in Malaysia, with the purpose of assessing the potential to attain the status and characteristics of a high-income country. Future economic growth is simulated under a business-as-usual baseline, where the growth...
| Main Authors: | , , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/844761592242576533/Malaysias-Economic-Growth-and-Transition-to-High-Income-An-Application-of-the-World-Bank-Long-Term-Growth-Model-LTGM http://hdl.handle.net/10986/33939 |
| Summary: | This paper studies economic growth in
Malaysia, with the purpose of assessing the potential to
attain the status and characteristics of a high-income
country. Future economic growth is simulated under a
business-as-usual baseline, where the growth drivers follow
their historical or recent trends, and under different
scenarios of reform, using the World Bank Long-Term Growth
Model (LTGM). Under the business-as-usual baseline,
Malaysia's GDP growth is expected to decline from 4.5
to 2.0 percent over the next three decades, following the
country's transition to high income in 2024 (which
might be delayed due to the effects of COVID-19). This
decline is partly due to demographics, but also a declining
marginal product of private capital and slowing growth rates
of total factor productivity and human capital. Strong
reforms are required for Malaysia to grow beyond what is
expected based on historical trends, especially for human
capital, female labor force participation, and total factor
productivity. In the strong reform scenario, based on growth
drivers achieving a target corresponding to the 75th
percentile of high-income countries, GDP growth is expected
to have a substantially higher trajectory, reaching 3.6
percent by 2050. |
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