A Study On Malaysian Income Distribution

There is an interaction between income distribution and economic growth,so that excessive imbalance of income distribution will inhibit economic growth.The imbalance of income distribution in developing countries is increasing with the economic growth,and its negative impact on economic growth is becoming more and more serious,therefore,income distribution has become one of the focus issues in the developing countries.Since independence,Malaysia has attached great importance to the issue of income distribution,and its development policy of each stage has inserted a significant impact on income distribution.Since the mid of 1970's,Malaysian income distribution has been gradually improved along with its economic growth.In particular,the narrowing of the income gap between the ethnic groups has provided a guarantee for the social harmony and stability of Malaysia and the long-term development of its economy.First of all,this paper has enquired into the specific impact of the development policy of Malaysia on its income distribution.Then,it introduces the economic growth of each stage and the imbalance of regional economic growth as well as the structure of the functional income distribution in recent years.Following this,this paper analyzes deeply the income gaps and changes between ethnic groups,urban and rural areas,as well as the regions by using the coefficient of variation,Williamson coefficient and range coefficient,a measure of income inequality degree index,to reflect the scale of the imbalance in the distribution of income.At the same time,this paper adopts the method of Rao from the aspects of ethnicity,urban and rural as well as regions to decompose the overall Gini coefficient with an aim to find out the main aspects of the imbalance of Malaysian income distribution.In the final,this paper establishes a vector auto regression model to test the long-term dynamic effects of Malaysian economic growth and industrial structure on the urban-rural income gap and regional income gap.The major findings of the paper can be summarized as follows.First,Malaysian government has achieved marvelous achievements in regular and control income distribution through the policies of economy and education in various economic stages.Second,the income gap between the ethnic groups in Malaysia has been narrowing,and the contribution to the overall income gap has been very weak.Third,the income gap between urban and rural areas in Malaysia remains stable,which declines slightly amid slight fluctuation.Fourth,under the political system with racial characteristics like Malaysia,the outflow of material capital and human capital will give severe side influence on the imbalance of economic growth among the regions,thus lead to the result of increasing fluctuation on the income gap among the regions.Fifth,this study finds out that the contributions of income gap among ethnic groups,between urban and rural areas as well as regions to the overall income of Malaysia are all less than 10%,therefore,the main factors affecting the income inequality of Malaysia are the inequality among ethnics,between and rural and the cities,as well as amid the regions,whereas,these are ascribed to income inequality decision.Sixth,along with the improving situation of functional structure of income and government's efforts of subsidies to the low-income family in recent years,the income of the bottom 40 percent of families in Malaysia has rapidly increased so as to reduce the degree of income inequality and improve rapidly the overall income distribution.Seventh,there are long-term equilibrium relationships among Malaysian economic growth,industrial structure and the income gap between urban and rural as well as regional income disparity.However,economic growth and the change of industrial structure are not always have the same effects to the income gap between urban and rural and among the regions.Based on the conclusions mentioned above,this paper proposed five suggestions with regard to improve income distribution of developing countries including China,in particular,those countries possess multi-ethnic groups.