Malaysia, like many other middle-income countries, is encountering a strategic dilemma dubbed “Middle Income Trap” (MIT). MIT refers to a situation where countries have successfully industrialized but struggle to build institutional capacities for technological innovation integral to attaining high-income status. To escape the MIT, Malaysia must build the institutions needed to develop high level skills in advanced engineering, design, and research & development. In turn, these institutions requires purposeful interaction between government agencies, academic or other educational institutions, and mostly-private commercial actors, or firms.  That is because effective human resource development (HRD) must harness both private motivations – the utilization of skills to attain higher productivity for commercially profitable activities - and public policy purposes, namely, to educate populations in ways that raise incomes and maintain national competitiveness.  Moreover, whereas well-functioning human resource development involves ongoing coordination between public, academic or non-profit, and private actors, creating new HRD institutions, and ensuring they support a structural transition from production- to innovation-based growth, involves an even broader collective-action agenda: planning and implementing investments in higher skills-development that are both risky (inasmuch as the economy’s skills-needs are shifting, and design or innovation is inherently riskier than simple manufacturing activity) and longer-term, since institutions are intended to support broad economic changes further into the future than any short-term educational purpose.

For these reasons, building the skills-development institutional system needed to escape the MIT involves coalition-building.  Yet coalitions do not simply emerge in response to widespread recognition of a general economic need for higher skills.  The politics of government’s relations with business and with the educational system matter crucially for efforts to collaborate, by overcoming conflicting or divergent narrow interests in favor of collaborative investment in broader, longer-term shared interests in higher skills. Here, inequality poses an obstacle to efforts to escape the MIT.  Malaysia’s initial industrialization pattern has engendered a high degree of inequality at various levels – between classes, between informal and formal employment sectors, and between export-oriented and domestic-market focused industries. This level of inequality may hamper the emergence of coalitions committed to creating high-skills development institutions.

My research involves the following questions: first, what are some of the most significant institutions that are charged with developing high skills and what are the coalitions of actors that created them? Second, what are the financial and staff support from government, business, and civil society for the ongoing operations of these institutions? And finally, what might be the conflicts of interest in these organizations’ missions and outcomes?

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Greg Felker

Associate Professor of Asian and International Studies, International Studies Program Chair
Willamette University

Liberal Arts Research Collaborative

900 State Street
Salem Oregon 97301 U.S.A.

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