Philippe Aghion, Sergei Guriev, Kangchul Jo, 07 November 2019

Moving from low- to high-income status implies that countries escape the middle-income trap. This implies institutional reform to create innovation-based growth. The column uses firm-level data to show how the Korean government's chaebol reforms in the late 1990s transformed the economy from an investment-based to an innovation-based model. There are lessons here for China.

Rabah Arezki, Rachel Yuting Fan, Ha Nguyen, 29 June 2019

The debate on the middle-income trap has largely focused on East Asia and Pacific countries, but the countries of Middle East and North Africa have significantly lower growth, which drops at an earlier level of income. The column argues that one factor is MENA's slow adoption of general purpose technologies. Barriers to the adoption of such technologies in key sectors could be an important transmission channel for the middle-income trap.

Longfeng Ye, Peter Robertson, 01 February 2016

The World Bank has identified 37 countries as being in a ‘middle-income trap’, but few formal tests of the middle-income trap hypothesis exist. This column presents a new test based on a more nuanced observation that incorporates information on a country’s long-run growth path. Only seven out of 46 middle-income countries are found to be potentially ‘trapped’. Some countries that are usually considered to be trapped may just be growing very slowly.

Lant Pritchett, Lawrence H. Summers, 11 December 2014

Dozens of nations think they are in the ‘middle-income trap’. Lant Pritchett and Larry Summers present new evidence that this trap is actually just growth reverting to its mean. This matters since belief in the ‘trap’ can lead governments to misinterpret current challenges. For lower-middle-income nations the 21st century beckons, but there are still 19th century problems to address. Moreover, sustaining rapid growth requires both parts of creative destruction, but only one is popular with governments and economic elites.

George Magnus, 31 January 2013

In 2013, China is at an important crossroads in its economic development. This column argues that we cannot continue to extrapolate from China’s recent economic record. If growth is to remain high and stable, choosing the right course will require nothing less than a significant change in China’s economic model, brought about by what might be the most important political reforms since the 1980s. Whether or not its growth performance tips it into the middle-income trap depends on engaging with and implementing widespread reforms that may be incompatible with the primacy of the Communist Party.

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