Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/179216
Authors: 
Pruchnik, Kamil
Zowczak, Jakub
Year of Publication: 
2017
Series/Report no.: 
ADBI Working Paper 760
Abstract: 
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.
Subjects: 
middle-income trap
innovation
JEL: 
O47
O38
O33
O21
O11
O12
O19
N30
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/3.0/igo/
Document Type: 
Working Paper

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