Political challenges in economic upgrading: Malaysia compared with South Korea and Taiwan
Propositions concerning the political economy of economic upgrading The political challenges for countries seeking to move beyond middle-income status are at least as complex and formidable as the economic and technical requirements. Growth strategies based on more advanced technologies and economies of scale imply shifts in policies and policy instruments, and broad institutional changes in the role of the state and its relations to economic agents. Policies and institutions that were productive for decades must be modified or abandoned. Some sectors must contract, causing unemployment and other problems. Legal and regulatory frameworks and incentives need revision to promote efficiency and innovation.