Revitalizing growth in Malaysia: towards a high income economy

Abstract

The search for growth is part of the quest for economic prosperity that is aspired by both developed as well as developing nations. This quest is motivated in part by the need to help the poor for while reduction in poverty can be achieved through both redistribution and economic growth; empirical findings seem to suggest that on average, growth has been more of a life saver to the poor than redistribution (Easterly 2002, 14). It is especially important in Malaysia where poverty reduction as well as the redistribution of wealth among the ethnic groups, namely from the non-Bumiputeras to the Bumiputeras (or the Malays and other indigenous groups in the country) is of paramount importance. This is because these twin goals, as encapsulated in the New Economic Policy (NEP) that was launched in 1971 in response to the interethnic riots in 1969, is predicated on growth as a fundamental condition for achieving the NEP goals. Moreover, the country has also targeted a developed country status by 2020 based on the Vision 2020 that was put forward by former Prime Minister Mahathir.