Southeast Asia’s Struggle with the Middle-Income Trap

Southeast Asian economies have experienced rapid growth since the 1990s, yet only Singapore and Brunei have reached the World Bank’s high-income classification. The rest remain in lower- or upper-middle-income brackets—Cambodia, Lao PDR, Myanmar, Timor-Leste, the Philippines and Vietnam in the lower tier; Malaysia, Thailand and Indonesia in the upper tier. The World Bank describes the “middle-income trap” as a systematic slowdown caused by an inability to adopt the institutional, infrastructural and innovation-driven structures needed for high-income growth.

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Regional gains in school enrolment have not translated into higher learning outcomes. International assessments such as PISA, PIRLS and TIMSS show most middle-income countries clustering at the bottom, while Singapore, Brunei and Vietnam perform comparatively better. University rankings echo this pattern: only eight institutions from the region appear in the Times Higher Education top-500, including the National University of Singapore, Nanyang Technological University and Universiti Brunei Darussalam, with the remaining five from Malaysia. The Global Innovation Index reports weak performance across all seven pillars—institutions, human capital and research, infrastructure, market sophistication, business sophistication, creative outputs, and knowledge and technology outputs—highlighting a region-wide R&D shortfall.

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Political scientists Richard Doner and Ben Ross Scheidner identify “upgrading coalitions” as essential for advancing education and R&D, but such coalitions are absent. Predatory elites—political, bureaucratic and corporate—prioritise rent-seeking from natural resources, low-skill labour and state contracts, often owning private education providers or holding senior education posts. Their interests, according to the analysis, run counter to the financial, human-resource and administrative reforms needed for higher-quality education. Technocratic reformers, sometimes backed by international financial institutions, advocate market-oriented policies, while progressive actors warn that such reforms could increase privatization and inequality. The clash has prevented the formation of a unified coalition capable of driving systemic change.

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Vietnam stands out as an exception: the Communist Party allocated roughly 5.7 % of GDP to education in 2017—far above Indonesia’s 3.6 % in 2015 and the Philippines’ 2.6 % in 2012—and pursued equitable access and teacher development. The article argues that overcoming the trap will require more than increased funding; it will demand a reconfiguration of power relations so that technocratic and progressive forces can outweigh predatory elites, thereby creating a durable platform for education and R&D reform.

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