Middle income trap in Malaysia, Indonesia and Vietnam - causes and solutions

Since the beginning of the millennium, Southeast Asia has become one of the fastest growing regions in the world. After recovery from the slowdown caused by the Asian financial crisis, most of them achieved significant growth and Asian miracle was created. Thanks to the liberalization of trade, export supporting policies, cheap labour and foreign investment, many of the southeast Asian countries entered the middle income countries group, which the World Bank defines with the Gross National Income per capita in the range from 1 045 USD to 12 760 USD. However, some countries in Southeast Asia are experiencing economic slowdown now and some of them fell into so called middle income trap. It is an economic phenomenon, which describes the situation when the country is no longer able to use its comparative advantages in the form of labour intensive production and its economic growth stagnates. Such economies find themselves on the edge between poor countries with cheap labour and advanced economies with high income. The main goal of the diploma thesis is to examine the topic of middle-income trap on chosen economies of Southeast Asia - Malaysia, Indonesia and Vietnam. The thesis is focused on the evaluation of their economic situation, the depth of the middle income trap and possible solutions for each of these countries.