Quality Infrastructure and the Middle-Income Trap: Lessons from the Malaysian Rubber Industry

Because this “middle-income trap” results in large part from weak productivity growth, prescriptions to escape the trap typically involve measures to help firms upgrade their processes and products through improvements in human capital (education and training), R&D, and infrastructure.  The present article seeks to fill two gaps in the middle-income gap literature.  First, it explores the roles of a particular type of “soft” or “quality infrastructure:” public testing and research centers (PTRs).  PTRs have historically been important mechanisms through which firms upgrade.  Second, the article explores why PTRs do (or do not) develop.  Analyzing upgrading in the Malaysian rubber industry and comparing that case with Thailand’s rubber sector, the article highlights the central importance of institutional and political contexts within which such quality infrastructure is (not) not built.