Malaysia's structural transformation from low to middle income is a success story, making it one of the most prominent manufacturing exporters in the world. However, like many other middle income economies, it is squeezed by the competition from low-wage economies on the one hand, and more...

We study the role of multinationals (MNCs) in facilitating firm-level and aggregate structural transformation. Using a stylized model of multinational production and trade, we show that an inward multinational liberalization in the manufacturing sector raises employment in host country firms,...