scholarly journals The potential role of aid in escaping the middle-income trap

2020 ◽  
Vol 42 (4) ◽  
pp. 420-441
Author(s):  
Timothy Yaw Acheampong ◽  
Beáta Udvari
Keyword(s):  
Economic Growth ◽  
Latin American ◽  
Income Group ◽  
Annual Growth Rate ◽  
Middle Income ◽  
Middle Income Countries ◽  
Income Status ◽  
Middle Income Group ◽  
Middle Income Trap ◽  
The Impact

AbstractRecently, the middle-income trap (MIT) has gained considerable attention – besides European countries, several African, Asian, and Latin-American developing countries are also affected. Many countries have remained in the middle-income bracket for decades, whilst only a few have advanced to high-income status. Felipe et al. in 2012 showed that an annual growth rate of at least 3.5 and 4.7% sustained for a period of 14 and 28 years is required respectively for upper-middle-income and lower-middle-income countries to escape the MIT. Economic growth is influenced by several factors including foreign aid received. Thus, in this study, we aim to answer the question of how aid affects economic growth in middle-income countries and whether aid may contribute to escaping the MIT. Focusing on the countries that have remained in the middle-income group between 1990 and 2017, our analysis confirms that aid contributes to economic growth; however, the impact is positive in the upper-middle-income countries and negative in the lower-middle-income countries. Aid is therefore, likely to be more effective in helping the upper-middle income countries to escape the MIT but not the lower-middle income countries.

scholarly journals Is Greenfield Investment Greener for the Welfare of Lower-Middle Income Countries? Market based Empirical Analysis with GMM Approach

2021 ◽  
Vol 3 (3) ◽  
pp. 194-206
Author(s):  
Ali Raza ◽  
Muhammad Iqbal ◽  
Nasir Hussian
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Income Group ◽  
Economic Activities ◽  
Host Countries ◽  
Middle Income ◽  
Middle Income Countries ◽  
Middle Income Group ◽  
One Step ◽  
Complete Data Analysis

Globalization is considered as the catalyst for the progress of economic activities and economic development of lower-middle-income countries. Greenfield investment not only promotes welfare but also helps in the health and education sector of these countries. This study examined thirty-four (34) sampled countries of the lower-middle-income group from different regions for a time span of 1998-2017. Im, Pesaran and Shin (2003) test is applied for testing panel unit root and one step system GMM technique is applied for the complete data analysis. The results of the study concluded that greenfield investment has increased economic growth and helped to push the welfare activities of sampled countries. Besides the increase in economic growth and welfare, greenfield investment also brings improvement in the health and education sectors through the transfer of new and advanced technologies from the developed nation firms to the host countries. Therefore, lower-middle-income countries must approve soft and friendly economic and business policies for the attraction of foreign investors from abroad. Such policies will help in promoting and increasing economic activities and economic development of the sampled countries.

Trapped in the Middle?

2020 ◽  
Keyword(s):  
Low Income ◽  
Income Group ◽  
Middle Income ◽  
Middle Income Countries ◽  
Income Status ◽  
Middle Income Group ◽  
Policy Measures ◽  
Analytical Approaches ◽  
New Evidence ◽  
Global Population

There is growing evidence that overcoming the low-income threshold and reaching middle-income status is not sufficient for countries to converge toward high-income levels. Few middle-income countries have successfully completed that transit in recent decades, with the majority remaining in the middle-income group, and so facing what has come to be called"the middle-income trap". It is therefore essential to explore whether middle-income traps really exist and, if they do, how these pitfalls are manifested, what their causes are, what economic policy measures are required to escape from them, and what international cooperation can do to support this process. Trapped in the Middle? brings together diverse perspectives on these important questions, providing new evidence and analytical approaches to enrich the debate on the domestic and international challenges faced by a significant number of middle-income countries, in which over three-quarters of the global population live.

scholarly journals A Discussion on Whether Turkish Economy is in Middle Income Trap or Not: A Perspective on Framework of the Exchange Rates Appreciation

2015 ◽  
Author(s):  
Murat Nişancı ◽  
Mine Gerni ◽  
Adem Türkmen ◽  
Ömer Selçuk Emsen
Keyword(s):  
Exchange Rate ◽  
Income Group ◽  
Middle Income ◽  
Income Per Capita ◽  
Middle Income Countries ◽  
Turkish Economy ◽  
The World ◽  
Middle Income Group ◽  
Per Capita ◽  
Middle Income Trap

Since 2007 long staying in the middle income group or especially unable to state a higher category, has begun to be considered as middle-income trap (MIT). According to World Bank (WB) classification, in 1955, Turkey reached to lower-middle income countries category from low-income category and staying there about 50 years. In 2004 Turkey has been reached constantly to upper-middle income countries category. However, last three years’ low growth figures and reaching 20% of the US income per capita have created many discussions whether Turkey entered in MIT. Besides, in parallel the integration of Turkish Economy to the world economy and to be exposed financial flows because of the world expansionary policies may result to have excessive appreciation of the national currency and to seem overvalued than real level of GDP in dollars. In emerging artificial bloating in income per capita is a result of undervaluation on the exchange rate. Therefore, in this study; the correct exchange rate is calculated with using base year determined depending on current account deficit’s minimum valued year or years which is assumed correct value of the exchange rate. By using calculated exchange rate, examined new GDP per capita series shows that Turkish economy could not reach the threshold 10000-12000 dollars despite being included in upper-middle income group in the WB classification. Furthermore, according to other classifications which are investigating MIT, it is also reached that Turkey has been placed in MIT long time period due to exchange rate pressures in terms of Turkey reached upper middle income position.

scholarly journals ASSESSMENT OF THE POSSIBILITY OF A MIDDLE-INCOME TRAP IN TURKEY

2020 ◽  
Vol 7 (4) ◽  
pp. 331-348
Author(s):  
Ali Cem ÖZTÜRK ◽  
Burcu YAVUZ TİFTİKÇİGİL
Keyword(s):  
World Bank ◽  
Unit Root Test ◽  
Income Group ◽  
Current Data ◽  
Middle Income ◽  
The World Bank ◽  
The World ◽  
Middle Income Group ◽  
Middle Income Trap ◽  
Atlas Method

Turkey has been under the middle-income country category according to the income category classification of the World Bank. Turkey promoted to high-middle-income group in 2005 after spending more than 50 years in lower-middle-income group. The purpose of this study is to identify the presence of middle-income trap in Turkey. The study brings together the most recent theoretical studies from different perspectives with respect to the presence of MIT in Turkey along with Robertson and Ye approach in the empirical phase. Within the context of this study, structural break unit root test using current data obtained through the Atlas method is applied in order to evaluate Turkey’s middle-income trap status. The GNI per capita Atlas Method (current US $) data of the World Bank for the years 1967-2016 are used in the study. The empirical analysis briefly showed that Turkey is not in the MIT.

scholarly journals Global competitiveness divide and the middle-income-trap

2020 ◽  
Author(s):  
Timothy Yaw Acheampong
Keyword(s):  
High Income ◽  
World Economic Forum ◽  
Middle Income ◽  
Income Levels ◽  
Global Competitiveness ◽  
Middle Income Countries ◽  
Income Status ◽  
The World ◽  
World Economic ◽  
Middle Income Trap

In recent times, the middle-income trap (MIT) has become a pertinent issue as economists, researchers and development practitioners continue seek answers to why the majority of middle-income countries find it difficult to advance to high-income status. There is still no consensus in literature as to the exact cause(s) and the solution to the MIT. The World Economic Forum posits that, the score of countries on the Global Competitive Index (GCI) 4.0 accounts for over 80% of the variation in income levels of countries. This suggests that the extent of global competitiveness of countries could potentially help them to escape the MIT. However, some competitiveness literature have identified an apparent competitiveness divide among countries. This paper therefore seeks to answer the following questions: how does middle-income countries differ from the high-income countries in terms of global competitiveness. The study utilises an independent samples t-test and effect size measures to examine the GCI 4.0 scores of 140 countries. The study finds a very large and significant competitiveness divide between the high and middle-income countries.

scholarly journals Capital account opening and economic growth——an empirical test based on systematic GMM

2021 ◽  
Vol 235 ◽  
pp. 01019
Author(s):  
Siming Jia
Keyword(s):  
Economic Growth ◽  
Empirical Test ◽  
Statistical Significance ◽  
High Income ◽  
Capital Account ◽  
Middle Income ◽  
Middle Income Countries ◽  
National Differences ◽  
The Impact ◽  
Low And Middle Income

This paper collected panel data of 74 countries from 1990 to 2017, and based on the Chinn-It index to depict the degree of capital account opening. Under the framework of the neoclassical economic growth model, the impact of capital account opening on economic growth was empirically tested by systematic GMM. The results show that: first, taking the overall capital account openness as the explanatory variable, the coefficient of the capital account openness of the whole sample is significantly positive. Further, considering the national differences found that high income countries capital account openness coefficient is significantly positive, but in low and middle-income countries capital account openness coefficient on economic and statistical significance were not significant, indicating that high income countries made open dividends, while in low and middle-income countries and earnings in the capital account liberalization. Finally, it proposes to open the capital account sub-projects step by step, strengthen prudent supervision in the process of further opening the capital account, and improve the regulatory legal system.

scholarly journals Financial Inclusion between Financial Innovation and Economic Growth A Study of Lower Middle Income Economies

2021 ◽  
Vol 7 (4) ◽  
Author(s):  
Hina Affandi ◽  
Qaisar Ali Malik
Keyword(s):  
Economic Growth ◽  
Financial Innovation ◽  
Income Group ◽  
Financial Inclusion ◽  
Sample Period ◽  
Middle Income ◽  
Underserved Community ◽  
Middle Income Group ◽  
The Relationship

Financial inclusion is a key concern that has achieved much impulsion in the last two decades internationally. It has the scope of reporting of financial scheme and institutions to the underserved community in the economy. This study examined the effect of financial innovation on economic growth with the mediation of financial inclusion. To address the relationship researchers in this study have used measures from a dataset of low and lower middle income group economies over a sample period from 2010-2017. The results of this study shows that financial innovation creates opportunities for financially excluded segment of the society which results in financial inclusion that leads to economic growth of low and lower middle economies. Therefore, financial innovation is a way for creation of financial inclusion in low and lower middle economies. 

scholarly journals Ukrainian Middle Class in the New Millennium: Trends and Prospects

2020 ◽  
pp. 71-92
Author(s):  
L. M. CHERENKO
Keyword(s):  
Middle Class ◽  
Income Distribution ◽  
Developed Countries ◽  
Income Group ◽  
Middle Income ◽  
Global Trends ◽  
The Past ◽  
General Decline ◽  
Middle Income Group ◽  
The Impact

Ukrainian society has undergone various transformations over the past twenty years. Adverse economic conditions and ineffi cient income distribution policies deterred the for mation of a large middle-income group, which should become the basis of the middle class. Developed countries, which in the last century reached the peak growth of the number and importance of the middle class, today indicate the process of “blurring” of this social group against the background of growing inequality. Against the background of global trends, Ukraine is facing a double blow — the income distribution, which is already shift ed towards low incomes, leaves no chance for positive changes in the social structure of society. Th e a im of the article is to establish trends in the formation of the middle-income group in Ukraine over a twenty-year period and assess the prospects for the formation of the middle class in the future, taking into account today’s Ukrainian realities and global trends. Th e novelty of the work is the analysis of a long series of dynamics to establish the trends of the middleincome group according to the classical approaches for international comparisons and according to the purely Ukrainian approach. In addition, micromodeling of incomes (expenditures) for 2020, taking into account the macroeconomic situation, allows us to assess the impact of the coronavirus crisis and quarantine measures on changes in the number of middle-income groups and the prospects of the middle class in Ukraine. Within the article classical methods of analysis of long series of data, in particular, the index method (basic and chain indices) are used for studying the dynamic changes in the formation of midd leincome groups. In order to assess the size of the middle-income group in 2020, the method of micromodeling is used: the 2020 microdata is modeled on the basis of the 2019 microdata (microfi le of the household living condition survey) and macro forecast data for the current year. Analysis of the dynamics of incomes, expenditures and various property character istics of the middle-income group over the past twenty years does not show positive trends. Quite the contrary, in Ukraine there is an impact of the global trend of “blurring” of the middle-income group as the basis of the middle class, with its specifi c features in consumer and investment behavior. Th e events of the last year also do not inspire optimism — by the end of the year the general decline in living standards and the growth of poverty is expected. In such conditions, the main burden of the crisis is expected to fall on the middle-income group. Th e article also considers the problem of the importance of forming the middle class for society and the feasibility of forming politics to this goal.

scholarly journals Assessment of the Impact of Environmental Pollution on Economic Growth

2017 ◽  
Vol 9 (3) ◽  
pp. 68-80
Author(s):  
Olga Kudryavtseva ◽  
E. . Ivanov ◽  
D. . Kolesnik ◽  
E. . Matveev ◽  
S. . Pechenkin ◽  
...  
Keyword(s):  
Economic Growth ◽  
Environmental Pollution ◽  
World Bank ◽  
Turning Point ◽  
Middle Income ◽  
Middle Income Countries ◽  
Econometric Methods ◽  
The World Bank ◽  
High Level ◽  
The Impact

The work is devoted to testing the hypothesis of the existence of an inverted U-shaped dependence of economic growth on the level of environmental pollution, which was based on the concept of the ecological curve of Kuznets. The authors, using econometric methods and data from the World Bank, show that the hypothesis is correct: there is a turning point between the positive and negative nature of the dependence of economic growth on the level of CO2 emissions. The hypothesis is confirmed for low- and middle-income countries, and the dependence is linear negative for countries with a high level of income. Based on the results, the authors formulate recommendations on environmental regulation in accordance with the level of the country's economic development.

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