Middle-income trap: Review of the conceptual framework

Arbeitspapier

The aim of this study is to develop a conceptual framework for the middle-income trap (MIT). Firstly, we present an extensive literature review of what the MIT concept is, why economies become 'stuck' in the MIT, and how the idea is criticized. Secondly, we put together a list of countries stuck in the MIT according to different definitions. We contribute to the literature by concluding that there are significant inconsistencies among the prevailing definitions of the MIT. In particular, 60.2% of all countries have been classified as stuck in the trap by at least one definition, as compared to 48.4% of all countries being currently classified as middle-income by the World Bank. Furthermore, at least 36.0% of all countries have been simultaneously classified as stuck in the trap by some definitions and as escapees by others. Thirdly, we propose a framework for assessing exposure to the MIT based on the following factors: i) unfavorable demographics, ii) low level of economic diversification, iii) inefficient financial market, iv) insufficiently advanced infrastructure, v) low level of innovation, vi) weak institutions, vii) inefficient labor market. Finally, as the analysis of the MIT definitions delivers mixed results, we introduce a new concept, the convergence trap.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ADBI Working Paper ; No. 760

Classification and Topics

• Classification: Wirtschaft ; Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence ; Technological Change: Government Policy ; Technological Change: Choices and Consequences; Diffusion Processes ; Planning Models; Planning Policy ; Macroeconomic Analyses of Economic Development ; Microeconomic Analyses of Economic Development ; International Linkages to Development; Role of International Organizations ; Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: General, International, or Comparative
• Subject: middle-income trap ; innovation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Pruchnik, Kamil ; Zowczak, Jakub
• Event: Veröffentlichung
• (who): Asian Development Bank Institute (ADBI)
• (where): Tokyo
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/179216
• Last update: 10.03.2025, 11:45 AM CET