scholarly journals Creating your own path to move beyond the middle-income trap: lessons from Korea

Nova Economia ◽  
2020 ◽  
Vol 30 (spe) ◽  
pp. 1145-1167
Author(s):  
Paulo Henrique Assis Feitosa
Keyword(s):  
Developing Countries ◽  
Policy Implication ◽  
New Technologies ◽  
Technological Development ◽  
Policy Implications ◽  
Middle Income ◽  
Income Status ◽  
Development Experience ◽  
Catch Up ◽  
Middle Income Trap

Abstract The development experience observed in Korea has been a symbol of successful catch-up for several decades. This process allowed its upward transition from middle income to high-income status and has drawn the attention of many streams of scholars. More recently, emergent research has improved our understanding of this experience and its policy implications for developing countries (Lee, 2013; 2016; 2019). This paper proposes a review of what this literature has to say about the mechanisms behind the successful path followed by Korea and a discussion of lessons to overcome the middle-income trap. It is argued that latecomers do not limit themselves to follow the path of technological development of the advanced countries and that alternative paths are possible. The main policy implication for latecomers is that a successful catch-up is possible yet difficult to achieve because it requires taking detours and leapfroging into new technologies.

scholarly journals Middle Income Trap and Challenges Facing Developing Countries

2019 ◽  
Author(s):  
Nguyen Quynh Huy
Keyword(s):  
Developing Countries ◽  
Research And Development ◽  
Human Resource ◽  
Development Process ◽  
Resource Quality ◽  
Middle Income ◽  
Middle Income Countries ◽  
Development Experience ◽  
Development Context ◽  
Middle Income Trap

The middle-income trap is becoming a topic that attracts many governments’ interest. The development experience has shown that only a few countries have succeeded in escaping the middle-income trap since 1960s. The paper focuses on the differences in the development context between current middle-income countries and the groups of countries that have successfully industrialized. Research results show that countries escaped the middle-income trap had higher human resource quality, especially the proportion of people involved in research and development activities. They also had lower inequality and informal sector. In particular, these countries had a deeper linkage with the foreign invested sector in upgrading technology during the development process. Therefore, the paper points out the important prepositions that current middle-income countries need to implement if they want to overcome the middle-income trap

Developing an economy based on knowledge and innovation in the context of the middle income trap

2015 ◽  
Vol 60 (10) ◽  
pp. 56-74
Author(s):  
Paweł Wieczorek
Keyword(s):  
Economic Growth ◽  
New Technologies ◽  
Current Model ◽  
Growth Theory ◽  
Labor Costs ◽  
Average Income ◽  
Middle Income ◽  
Endogenous Growth Theory ◽  
Middle Income Trap

The article is a contribution to the discussion on the necessity to change the current model of economic growth of Poland for model of economy based on knowledge and innovation. In this way, our country will be able to overcome the threats that might push the economy into the trap of the average income, expressed in long-term slowdown in GDP growth. The endogenous growth theory, formed after 1989 and characterized by duplication of Western technology, enabled relatively rapid growth by over 20 years. Currently, Poland to ensure an economic growth is facing the need for innovative technologies and innovation. Risks associated with middle income trap are very real because of the disappearance of comparative advantage, which results from relatively low labor costs. The creation in Poland conditions to accelerate economic growth requires action to increase the propensity of entrepreneurs to reach for new technologies and innovation and attractive market offer from the national centers for research and development.

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 Catching up, falling behind: the need to build upgrading coalitions for innovation and inclusive development in South Africa

Nova Economia ◽  
2020 ◽  
Vol 30 (spe) ◽  
pp. 1115-1144
Author(s):  
Glenda Kruss
Keyword(s):  
South African ◽  
Informal Economy ◽  
Local Economic Development ◽  
Inclusive Development ◽  
Middle Income ◽  
Catching Up ◽  
Open Debate ◽  
Catch Up ◽  
Middle Income Trap ◽  
Income Concentration

Abstract Through analysis of the South African case, a country stalled in a middle income trap, the paper aims to add to the literature on catch-up. It uses Albuquerque’s (2019) model of the vicious cycles arising from inequality and income concentration, together with the notion of ‘upgrading coalitions’ (Doner and Schneider 2016) required to challenge these vicious cycles, to analyse the persistence of lock-ins. It then analyses a global astronomy project, a ‘window of opportunity’ building on historically grown capabilities, promoted by ‘upgrading coalitions’ operating in the national interest. In contrast, it proposes a ‘detour’ to build domestic capabilities, driven by an upgrading coalition centred on local economic development and livelihoods in the informal economy. The paper aims to reinforce the evidence on how inequality is both a cause and consequence of a middle income trap, and open debate on how upgrading coalitions may be a critical strategy for breaking lock-ins.

The Evolution of the Digital Divide across Developing Countries

2013 ◽  
pp. 1554-1570
Author(s):  
Nicoletta Corrocher ◽  
Anna Raineri
Keyword(s):  
Developing Countries ◽  
Digital Divide ◽  
Low Income ◽  
Competition Policy ◽  
Developed Countries ◽  
Policy Implications ◽  
Effective Strategy ◽  
Middle Income ◽  
Middle Income Countries ◽  
Emerging Patterns

This chapter aims at investigating the evolution of the digital divide within a set of developing countries between the years 2000 and 2005. In doing so, it moves away from the traditional analysis of the digital divide, which compares developed countries and developing countries, and examines the existing gap within a relatively homogeneous group of countries. On the basis of the theoretical and empirical contributions from scholars in different disciplines, we select a series of socioeconomic and technological indicators and provide an empirical assessment of the digitalization patterns in a set of 51 low income and lower-middle income countries. By means of cluster analysis techniques, we identify three emerging patterns of the digital divide and derive a series of policy implications, related to the implementation of an effective strategy to reduce digital backwardness. The characteristics of each pattern of digitalization can be also usefully employed to understand whether past interventions, especially in the area of competition policy, have been successful in addressing country-specific issues.

Growth Strategies to Avoid the Middle-Income Trap

2020 ◽  
pp. 24-47
Author(s):  
Homi Kharas ◽  
Indermit Gill
Keyword(s):  
Low Income ◽  
Technical Change ◽  
Policy Implications ◽  
Low Income Countries ◽  
Growth Strategies ◽  
Functional Theory ◽  
Middle Income ◽  
Advanced Economies ◽  
The Subject ◽  
Middle Income Trap

Since the authors of this chapter coined the term in 2006, “the middle-income trap” has been the subject of scores of investigations. The evidence in support of its existence has been mixed, but their original proposition was that of the possibility of a trap, not its inevitability. In this chapter, they emphasize the absence of a functional theory of economic growth in middle-income economies. Solow–Swan models did well to explain growth in low-income countries, and Lucas–Romer models emphasizing endogenous technical change identified the main drivers of growth in advanced economies. Neither class of models has, however, satisfactorily explained successful transitions from one type of growth to the other. The authors suggest that Schumpeterian models proposed by Aghion, Howitt, and others that stress creative destruction and institutional change provide the analytical foundations for a better understanding of growth in middle-income economies. They present evidence that is consistent with the predictions of this approach, and discuss its policy implications.

scholarly journals Luck, Policy or Something Else Entirely? Vietnam's Economic Performance in 2009 and Prospects for 2010

2009 ◽  
Vol 28 (4) ◽  
pp. 71-94 ◽  
Author(s):  
Adam J. Fforde
Keyword(s):  
Economic Performance ◽  
Global Financial Crisis ◽  
Policy Implications ◽  
The Political ◽  
Middle Income ◽  
State Sector ◽  
Political Concern ◽  
Income Status ◽  
And Performance ◽  
The Global Financial Crisis

Vietnam's economic performance in 2009 is seen by the Vietnamese government and representatives of the Western donor communities as good, with the effects of the global financial crisis relatively mild. The paper notes a lack of contestation of these mainstream views and locates them within an assessment of major trends in 2009, and medium-term issues. Particular focus is placed upon the policy implications of rural development and the need for a strong rationalisation of the state sector. Remarks upon the political economy of change then permit comments upon interactions between economic performance and gathering social and political concern with the political challenges of transition to so-called ‘middle income’ status, which in many countries has posed novel and tricky problems of adjustment, often requiring major social and political adjustments that have not always been successful. The paper concludes by suggesting that, as in the past, Vietnam's style of change finds some things easy and others hard, and that this has its reflection in economic policy and performance.

scholarly journals GROWTH SLOWDOWNS AND MIDDLE-INCOME TRAP: EVIDENCE FROM NEW UNIT ROOT FRAMEWORK

2020 ◽  
pp. 1-17
Author(s):  
FUMITAKA FURUOKA ◽  
KIEW LING PUI ◽  
CHINYERE EZEOKE ◽  
RAY I. JACOB ◽  
OLAOLUWA S. YAYA
Keyword(s):  
Unit Root ◽  
Structural Break ◽  
Testing Procedure ◽  
Policy Implications ◽  
Unit Root Tests ◽  
Cross Sectional ◽  
Middle Income ◽  
Middle Income Countries ◽  
Middle Income Trap ◽  
High Possibility

This paper suggests a new testing procedure to systematically examine the middle-income trap (MIT). To empirically demonstrate this procedure, one high income and 14 middle-income countries are examined using newly developed unit root tests — Fourier ADF with structural break (FADF-SB) and Seemingly Unrelated Regressions Fourier ADF (SUR-FADF). The FADF-SB test incorporates unknown nonlinearity and smooth break in the time-series, while the SUR-FADF test accounts for cross-sectional dependency. The empirical findings produced mixed results: 10 countries have a relatively high possibility of facing the MIT problem, while only one country has a relatively low possibility of facing the problem. For the remaining three countries, it is uncertain whether they will face the problem of MIT. These empirical findings have significant policy implications.

scholarly journals Human Capital Spending: A Review on the Developments and the Results in Turkey

2015 ◽  
Author(s):  
Haşim Akça
Keyword(s):  
Developing Countries ◽  
Human Capital ◽  
Social Relations ◽  
New Technologies ◽  
Technological Development ◽  
Developed Countries ◽  
Capital Spending ◽  
Knowledge Capability ◽  
Factors Of Production ◽  
The Developed Countries

Human capital is defined as values like knowledge, capability, experiment and dynamism that labour contributed to production holds and enables more productive usage of other factors of production. According to this definition that includes properties of individuals in the production process like knowledge, capability, experiment and dynamism, with the definition of human capital, all capabilities devoted to the increasing production is incorporated. Developing and efficient usage of human capital and is very crucial especially in less developed and developing countries. In this countries, not only selecting the optimal combination but also acquisition and the way to use these factors of production in order to increase production exhibits an important dimension. However, this will not be sufficient to catch the developed countries. In order to achieve this goal, beyond transmitting new technologies, constructing knowledge and technology that fosters this technological development is required. Developing and efficient usage of human capital, one of the important dynamics of the economic growth is very crucial in less developed and developing countries comparing to developed countries. In order to develop human capital educated and healthy society is needed. Efficient assessment of the associated capital requires satisfaction of individuals by the means of tangible facilities social relations. In this study, the evolution of human capital will be investigated under human capital indicators and findings will be revealed. Therewithal, several suggestions will be powered for developing human capital.

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