Publication: Avoiding Middle-Income Growth Traps
Date
2012-11
ISSN
Published
2012-11
Author(s)
Abstract
Since the 1950s, rapid growth has
allowed a significant number of countries to reach
middle-income status; yet, very few have made the additional
leap needed to become high-income economies. Rather, many
developing countries have become caught in what has been
called a middle-income trap, characterized by a sharp
deceleration in growth and in the pace of productivity
increases. Drawing on the findings of a recently released
working paper (Agenor and Canuto 2012), as well as a growing
body of research on growth slowdowns, this note provides an
analytical characterization of 'middle-income
traps' as stable, low-growth economic equilibrium where
talent is misallocated and innovation stagnates. To
counteract middle-income traps, there are a number of public
policies that governments can pursue, such as improving
access to advanced infrastructure, enhancing the protection
of property rights, and reforming labor markets to reduce
rigidities all implemented within a context where
technological learning and research and development
(R&D) are central to enhancing innovation. Such policies
not only explain why some economies particularly in East
Asia were able to avoid the middle-income trap, but are also
instructive for other developing countries seeking to move
up the income ladder and reach high-income status.
Link to Data Set
Citation
“Agénor, Pierre-Richard; Canuto, Otaviano; Jelenic, Michael. 2012. Avoiding Middle-Income Growth Traps. Economic Premise;No. 98. © http://hdl.handle.net/10986/16954 License: CC BY 3.0 IGO.”