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The Malaysian Miracle

August 31 marked the 50th anniversary of Malaysia’s Merdeka: independence after more than 400 years of colonialism. Malaysia’s peaceful, non-violent struggle may not have received the attention that Mahatma Gandhi’s did in India, but what Malaysia has accomplished since then is impressive – and has much to teach the world, both about economics, and about how to construct a vibrant multi-racial, multi-ethnic, multi-cultural society.

The numbers themselves say a lot. At independence, Malaysia was one of the poorest countries in the world. Though reliable data are hard to come by, its GDP (in purchasing power parity terms) was comparable to that of Haiti, Honduras, and Egypt, and some 5% below that of Ghana. Today, Malaysia’s income is 7.8 times that of Ghana, more than five times that of Honduras, and more than 2.5 times that of Egypt. In the global growth league tables, Malaysia is in the top tier, along with China, Taiwan, South Korea, and Thailand.

Moreover, the benefits of the growth have been shared. Hard-core poverty is set to be eliminated by 2010, with the overall poverty rate falling to 2.8%. Malaysia has succeeded in markedly reducing the income divides that separated various ethnic groups, not by bringing the top down, but by bringing the bottom up.

Part of the country’s success in reducing poverty reflects strong job creation. While unemployment is a problem in most of the world, Malaysia has been importing labor. In the 50 years since independence, 7.24 million jobs have been created, an increase of 261%, which would be equivalent to the creation of 105 million jobs in the United States.