The Leap of the Tiger: Escaping the Middle-income Trap to the Technological Frontier

The Asian miracles along with a handful of European economies and oil exporters are the few countries that reached high-income status during 1960-2014. In contrast, many good-performing countries such as Malaysia have been middle-income countries for several decades despite relatively strong growth and a substantial improvement in education and export sophistication. We argue that the key factor differentiating the Asian miracles from economies like Malaysia is the creation of technologies by domestic firms and leapfrogging to the technological frontier at an early stage of development.