Malaysia has witnessed growth even before independence in 1957 but per capita income has risen much faster since independence. In 2014, per capita GDP was 7.5 times what it was immediately after independence. But why didn’t Malaysia grow as rapidly as its Northeast Asian neighbors? Had Malaysia been held back by specific government policies? And if government policies inhibited growth, how was it that Malaysia’s economy still performed far better than the economies of most of Latin America and Sub-Saharan Africa?

The aim of this paper is to decipher the reasons behind these variations in Malaysia’s comparative economic growth with other countries. This essay then seeks to attempt to answer the question of whether Malaysia will eventually catch up with the high income countries of the world or whether it will be caught in the ‘middle-income trap’.