scholarly journals Middle-Income Trap - Threat or Reality

2021 ◽  
Vol 15 (3) ◽  
pp. 321-331
Author(s):  
Bozena Leven
Keyword(s):  
Technology Development ◽  
Work Force ◽  
Sustainable Growth ◽  
Warning Sign ◽  
Initial Growth ◽  
Labor Costs ◽  
Product Complexity ◽  
Middle Income ◽  
Income Status ◽  
Middle Income Trap

The middle-income trap (MIT) describes obstacles to sustainable growth experienced by some middle-income countries. The initial growth of emerging economies is often characterized by reliance on labor intense, import driven factors, facilitated by foreign direct investment (FDI). As it matures, that initial growth becomes more dependent on foreign technology imports to produce exports, which can impede sustained growth. Poland is representative of several middle-income East European countries; after the 1990 transition, Poland had inadequate infrastructure and obsolescent industries, but a work force that was highly educated. Since 1990, relatively low labor costs, technology imports, European Union (EU) funding, and FDI have propelled Poland to middle-income status. However, Poland’s comparative labor advantages have recently diminished, while both the quantity and composition of FDI inflows are changing. In this paper, we examine whether some growth factors have been exhausted, leaving Poland subject to MIT. To answer this question, we assess changes in investment and factor productivity, labor force educational attainments, FDI, new product/technology development, imports, export diversification, product complexity, and other factors. We conclude that in Poland several conditions consistent with MIT are gaining importance and may be an early warning sign of challenges to its future growth.

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 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.

A Discursive Trap?: The Power and Danger of the Middle-income Trap Discourse

2018 ◽  
Vol 2018 ◽  
Author(s):  
Nicole Curato
Keyword(s):  
Discourse Analysis ◽  
Middle Income Country ◽  
Income Country ◽  
Alternative Possibilities ◽  
Middle Income ◽  
Rhetorical Devices ◽  
Income Status ◽  
Rapid Economic Growth ◽  
Key Policy ◽  
Middle Income Trap

The “middle-income trap” has gained currency in the past decade among economists and development practitioners. The term draws attention to countries that have experienced rapid economic growth but failed to break through the high-income status. This article critically examines the underlying discursive logics behind the vocabulary of the middle-income country trap. The term may seem technical and benign, but its ontology, assumptions, rhetorical devices, and conception of economic actors privilege a sequential view of economic development bereft of normative considerations and ethical standpoints. This article argues that the middle-income country trap narrative posits a worldview that promotes a growth agenda using the experience of the industrialized North as a benchmark. The term “trap,” particularly, posits an imperative for growth where being “stuck” in the middle-income status is pathologized and demands for economic intervention is legitimized. This discourse is formed by a range of rhetorical devices that evoke urgent responses to the impending threat of lagging behind. Motives for using this vocabulary may not be malicious—well-meaning, even—but the taken-for-granted status of these knowledge claims warrants a critical engagement. Discourses have consequences in economic planning and policy formulations for they provide the vocabulary for desirable economic trajectories. To analyze the middle-income trap discourse, therefore, is to stimulate a systematic process of critique that can potentially open spaces for alternative possibilities for the current economic order. These observations are based on a qualitative discourse analysis of key policy documents and punditry on the puzzles and perils of countries trapped in the middle-income status. Using Dryzek’s (1997) approach to discourse analysis, this article seeks to interrogate and de-naturalize dominant economic agendas and offer a critical sociological language that can lay bare the underpinnings of a technocratic discourse. Overall, this article argues for a reflective take on technical vocabularies to break free from emerging discursive traps.

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 Old wine and new bottles: A critical appraisal of the middle-income trap in BRICS countries

2018 ◽  
Vol 4 (2) ◽  
pp. 133-154
Author(s):  
Christopher A. Hartwell
Keyword(s):  
Property Rights ◽  
Emerging Markets ◽  
Critical Appraisal ◽  
Value Added ◽  
Policy Recommendations ◽  
Size Of Government ◽  
Middle Income ◽  
Brics Countries ◽  
Income Status ◽  
Middle Income Trap

The idea of a middle-income trap is now over a decade old and continues to be applied to growth paths which have not been self-sustaining. With the bulk of emerging markets now approaching middle-income status, and given the reality of slower growth for many countries (and the policy recommendations that currently exist for overcoming this problem), is the middle-income trap still a relevant framework? Using reference to the BRICS countries, the key finding of this analysis is that the middle-income trap conceptualization is of little value-added, as fundamentals still matter, especially in relation to macroeconomic stability. Similarly, we note that “quality” institutions are necessary, both political and economic, including (smaller) size of government and property rights. The “trap” as currently formulated is thus nothing new or particularly relevant, as it repackages some familiar structural issues while avoiding other crucial ones.

scholarly journals Bangladesh 2000-2017: Sustainable Growth, Technology and the Irrelevance of Productivity

2017 ◽  
Vol 22 (Special Edition) ◽  
pp. 183-198 ◽  
Author(s):  
Matthew McCartney
Keyword(s):  
Developed Countries ◽  
Sustainable Growth ◽  
Middle Income ◽  
Middle Income Countries ◽  
Policy Responses ◽  
Growth Prospects ◽  
Middle Income Trap ◽  
Economic Thinking ◽  
Growth Technology

This paper focuses on the case of Bangladesh as an example of a country that is at risk of falling into the ‘middle income trap’, in other words the risk that a country that has attained middle income levels will then be unable to join the club of developed countries. This paper uses the theory of Unequal Exchange from the Dependency School to understand the middle income trap in Bangladesh and further argues that the ideas of productivity, competitiveness and technological change derived from orthodox economic thinking are not useful in understanding growth prospects and policy responses in contemporary middle income countries. Alternately, the paper explains the role of structural change as a means of sustaining growth in middle income countries.

On the Path to High-Income Status or to Middle-Income Trap: The Turkish Economy in Search of Its Future

2018 ◽  
pp. 1-11
Author(s):  
Ahmet Faruk Aysan ◽  
Mehmet Babacan ◽  
Nurullah Gur ◽  
Hatice Karahan
Keyword(s):  
High Income ◽  
Middle Income ◽  
Income Status ◽  
Turkish Economy ◽  
Middle Income Trap

The Flying-Geese Theory

2019 ◽  
pp. 108-126
Author(s):  
Terutomo Ozawa
Keyword(s):  
Multinational Corporations ◽  
Low Income ◽  
Structural Changes ◽  
Double Helix ◽  
High Income ◽  
Sustainable Growth ◽  
Growth Stages ◽  
Middle Income ◽  
Income Status

This chapter examines the ‘flying-geese’ (FG) theory first introduced by Japanese economist Kaname Akamatsu in the mid-1930s, arguing that it must be reformulated in the light of stepped-up globalization. It first provides an overview of the basic assumptions of the FG theory before discussing the role of multinational corporations as an instrument of catch-up and an endogenizer of growth in the world economy. It then analyses the ‘(double-helix) ladder of development à la Schumpeter’ that can capture and expand on Akamatsu’s ideas about the inter- and intra-structural changes and the evolutionary hierarchy of economies aligned at different growth stages. It also considers the Schumpeterian ladder-related, S-shaped growth trajectory along which economic development proceeds. Finally, it describes three rounds of national ecosystem reform needed to move sustainable growth forward: from low-income stagnation towards middle-income status; bypassing the middle-income trap towards high-income status; and escaping the ‘high-income (sclerosis) trap’.

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