chapter  6
Growth, employment and equity
The Malaysian experience
ByPrema-chandra Athukorala
Pages 21

Equitable distribution of gains from rapid growth has been a well-known feature of economic transformation in the newly industrialized economies (NIEs) in East Asia – Hong Kong, South Korea, Taiwan and Singapore. Mainstream economists interpret this achievement as an intrinsic feature of export-led industrialisation, which, given the right policies, can be replicated in other developing countries. The argument is that as the comparative advantage of developing countries in international production is in relatively labour-intensive production, the expansion of manufactured exports translates into higher employment. As labour is the most widely distributed factor of production in the economy, employment expansion and the subsequent increase in real wages reduce poverty and income inequality (Fei et al. 1979; Balassa 1989; Krueger 1997; Little 1999).