Trends in Output and Income Disparities Across the States of Malaysia, 1972-2009

In this paper, we investigate trends in the disparities in output and income across the states of Malaysia during the past four decades, using several different methods — including the log-t test proposed by Phillips and Sul (2007, 2009) — and data for a range of variables. The results indicate that output (GDP) per capita at the state level generally diverged over the study period, although there was convergence within each of the three statistically identifiable "clubs". By contrast, disparities with regard to average household income for Malaysian citizens appear to have decreased generally across all the states as a group.