Middle income trap
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The middle income trap is an
Origin of the term
The term was coined by economists Indermit Gill and Homi Kharas in 2007 when they were working on the ground strategies for East Asian economics in the World Bank report "An East Asian Renaissance: Ideas for Economic Growth".[3][4]
Dynamics and avoidance
According to the concept, a country in the middle-income trap has lost its competitive edge in the export of manufactured goods due to rising wages, but is unable to keep up with more developed economies in the
Sociologist Salvatore Babones and Political scientist Hartmut Elsenhans call the middle-income trap a "political trap" as economic methods to overcome it exist. However, few countries use them because of their political situation. They trace the causes of the trap to the structural problems and the inequalities generated in the early development process. According to them, the wealthy elites then follow their interests by bargaining for a strong currency which shifts the economy's structure towards the consumption of luxury goods and low-wage labor laws, which prevents the rise of mass consumption and mass income. They argue that countries can escape the middle-income trap by investing in physical and human infrastructure, enforcing social policies like higher minimum wages, and having a weak currency that makes exports competitive and stimulates domestic employment.[6][7]
According to
According to the The Economist basing on data from the World Bank, from 1960 to 2022, only 23 economies has been said to have escaped the middle income trap, most notably the Four Asian Tigers of Hong Kong, Singapore, South Korea,[10] and Taiwan, Seychelles in Africa, Poland in Central Europe, as well as Saudi Arabia in the Middle East.[11][12] Diversifying exports is also considered important to escape the middle income trap.[13]
Criticism
Significant debates exist regarding the empirical validity of the “middle-income trap.”[14]
Other economists either find that there is no middle income trap[15] or claim that debates about a “middle-income trap” appear anachronistic: middle-income countries have exhibited higher growth rates than all others since the mid-1980s.[16]
See also
- Crony capitalism
- Dual-sector model
- Human capital
- Human Development Index
- Resource curse
- World-systems theory
References
- ^ a b Graphic detail Charts, maps and infographics (2011-12-22). "Asias Middle Income Trap". Economist.com. Retrieved 2014-08-11.
- ^ "The middle-income trap turns ten". World Bank. 26 August 2015. Retrieved 9 March 2021.
- S2CID 225018997
- ^ Bulman, David; Eden, Maya; Nguyen, Ha. "Transitioning From Low-Income Growth To High-Income Growth: Is There A Middle-Income Trap?" (PDF). Asian Development Bank Institute. Retrieved December 7, 2023.
- ^ "Indonesia risks falling into the Middle Income trap". Adb.org. 2012-03-27. Archived from the original on 2014-07-30. Retrieved 2014-08-11.
- ^ Babones, Salvatore (2015-12-01). "Escaping the middle income trap". Sydney eScholarship repository. Retrieved 2023-05-05.
- ISBN 978-0-8047-9989-8.
- ^ "Seminar on Asia 2050". Adb.org. 2011-10-18. Retrieved 2014-08-11.
- ^ Asia 2050: Realizing the Asian Century. Adb.org. 2013-05-09. Retrieved 2014-08-11.
- ^ https://podcasts.google.com/feed/aHR0cHM6Ly9wb2Rlay5uZXQvaW5kZXgucGhwL3plaWhhbi1vbi1nZW9wb2xpdGljcy9mZWVk/episode/aHR0cHM6Ly9tZWRpYXMucG9kZWsubmV0LzU2OS8wYzRmYjQwMGVkOWJhZDE2OWY3MDg2ODRjYTljOWM3ZmRjZWJmY2E1Lm1wMw?sa=X&ved=0CCoQz4EHahcKEwjA_vPt1PaEAxUAAAAAHQAAAAAQbg
- ISSN 0013-0613. Retrieved 2023-12-15.
- ^ "Which countries have escaped the middle-income trap?". Yahoo Finance. 2023-03-30. Retrieved 2023-12-19.
- ^ Shek, Colin (23 May 2019). "Aiming for the Top: Can China Escape the Middle Income Trap?". Cheung Kong Graduate School of Business (CKGSB).
- OCLC 1347023475.
- ^ Bulman, David; Eden, Maya; Nguen, Ha. "Transitioning from low-income growth to high-income growth: is there a middle-income trap?" (PDF). Asian Development Bank.
- ^ Patel, Dev; Sandefur, Justin; Subramanian, Arvind. "The New Era of Unconditional Convergence". Center For Global Development.
Further reading
- Asia 2050: Realizing the Asian Century. Asian Development Bank. 2011-08-01.
- "Indonesia risks falling into the middle-income trap | Asian Development Bank". Archived from the original on 2014-07-30. Retrieved 2021-03-09.
- "Philippines faces middle-income trap | The Manila Bulletin Newspaper Online". Manila Bulletin. 2013-02-13. Archived from the original on 13 February 2013. Retrieved 2021-03-09.
- Russians are stuck in 'Middle Income Trap'
- "The Middle Income Trap - Latin America's Middle-Income Class". Americas Quarterly. 2011-01-21. Retrieved 2021-03-09.
- "How China can avoid the middle income trap". www.theaustralian.com.au. 2015-04-28. Retrieved 2021-03-09.
- "The middle-income trap has little evidence going for it". The Economist. 2017-10-05. ISSN 0013-0613. Retrieved 2021-03-09.
- Tasci, Kamil; Erinc Yeldan; Voyvoda, Ebru; Ozsan, Mehmet Emin (2013). Escape from the Middle Income Trap: Which Turkey?. Turkish Business and Enterprise Confederation. .