ABSTRACT
This chapter takes a political economy approach in analysing the middle-income trap (MIT) of the Malaysian economy. The chapter reviews Malaysia's economy and identifies the features or symptoms that characterize Malaysia as an MIT economy, and critically examines the underlying socio-economic challenges that confront the economy. The macroeconomic stability Malaysia's lacklustre economic performance had raised serious concerns, especially with respect to declining private investment and its implications for sustainable growth. A macro or country-level framework of analysis will be used to examine the political economy environment and circumstances that frustrate or facilitate policy reforms. A political economy approach is adopted to identify and evaluate the underlying socio-political dynamics that undermine and weaken the implementation of sound economic policies. The well-established institutional framework for policymaking has contributed to swift and speedy decisions to tackle major economic challenges, especially during periods of boom and bust.
