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The paper evaluates the convergence paths of Central and Eastern European member states of the EU during the 2010s, when the main task for these countries was avoiding the middle-income trap—when wages are not so low anymore to compete with less developed countries, while innovation is not developed enough yet to compete with developed countries. Using various statistical indicators, the paper shows that while most countries in the region have been on a convergence path during the decade under analysis, not all succeeded in avoiding the trap. While some countries successfully implemented policies to step on the path of productivity- and innovation-led growth (Czechia, Slovenia, Estonia, and Lithuania), in several other states, growth was supported mainly by low costs and loose monetary conditions including significant transfers from the EU. The comparative analysis of Estonia and Hungary illustrates the different growth models and shows how the institutional system plays a key role in exiting the trap.

In this study, it was analyzed whether the export dynamics affected net exports in fourteen emerging countries and eight developed countries between the years of 1995–2019. Export sophistication, export product diversification, export market diversification, export product concentration, export market concentration, and real effective exchange rate were used as the proxy of export dynamics. Panel data methods that take into account cross-section dependency and structural breaks were used for the analysis. As a result of the study, in developed countries, it was concluded that export sophistication, export product concentration, and export market diversification positively affected the net export, and the real effective exchange rate negatively affected the net export. For the emerging countries, it was concluded that export market concentration and real exchange rate negatively affected the net exports. Also, in emerging countries, it was found that export sophistication and export product diversification do not have any impact on net exports since export sophistication and export product diversification are not an adequately high level compared to developed countries for increasing the net export. The fact that in these countries the proportion of high-tech product exports are low in total exports and the product range in exports are not wide cause these indexes to be low. This situation poses a significant risk in terms of falling into the middle-income trap.

The book under review reveals the complexities of transition processes and the evolution of reformers, elites and society’s notions of those processes nature. Four major blocks of problems are analyzed in the monograph: the nature of Russian capitalism which is determined by special features of its formation; the generality of transition processes of the economies that found themselves in the middle income trap; the impact of social inequality on the solution of economic, social and environmental problems. The monograph proves the transformation processes success evaluation criteria, and highlights the conditions that are necessary in order to achieve positive results of reforms. The cluster approach used in the analysis of intercountry inequality makes it possible to point out a number of stylized facts showcasing the lack of convergence in the economic growth course. The paper proves that the existing scale of social inequality makes it impossible to achieve the UN Sustainable Development Goals.

The middle-income trap (MIT) describes obstacles to sustainable growth experienced by some middle-income countries. The initial growth of emerging economies is often characterized by reliance on labor intense, import driven factors, facilitated by foreign direct investment (FDI). As it matures, that initial growth becomes more dependent on foreign technology imports to produce exports, which can impede sustained growth. Poland is representative of several middle-income East European countries; after the 1990 transition, Poland had inadequate infrastructure and obsolescent industries, but a work force that was highly educated. Since 1990, relatively low labor costs, technology imports, European Union (EU) funding, and FDI have propelled Poland to middle-income status. However, Poland’s comparative labor advantages have recently diminished, while both the quantity and composition of FDI inflows are changing. In this paper, we examine whether some growth factors have been exhausted, leaving Poland subject to MIT. To answer this question, we assess changes in investment and factor productivity, labor force educational attainments, FDI, new product/technology development, imports, export diversification, product complexity, and other factors. We conclude that in Poland several conditions consistent with MIT are gaining importance and may be an early warning sign of challenges to its future growth.

Using the Indonesian Family Life Survey (IFLS), we measure intergenerational expenditure mobility by applying logistic and Unconditional Quintile Regressions (UQR) to explore how intergenerational ...

Overcoming the middle-income trap is the main task of China’s next stage of economic development. International experiences show that continuous innovation and industrial upgrading in an open marke...

While Malaysia’s economy is widely acknowledged as having the capacity to escape the middle-income trap and achieve highly-industrialised status, this potential has not been realised. One theoretic...

This paper starts by showing that Chile and Malaysia are on the path of escaping the middle-income trap in terms of their income level relative to that of the USA. In contrast to the conventional view, we find that the leading export sectors are not manufacturing (such as electronics) in Malaysia or mining alone in Chile. Instead, the engines of growth have been (1) resource-based sectors (petroleum, rubber and palm oil) in Malaysia; and (2) non-mining resource-based sectors (salmon, fruits, wine and wood-based) in Chile. Furthermore, the sustained growth of these sectors is not the result of free-markets, as frequently argued, but also of specific industrial policy measures, that have enabled the accumulation of productive and innovation capabilities through R&D support, fiscal incentives, export assistance, and quality control. We also find that the emergence of locally-controlled firms has been an important aspect of this long-term success, although the sources of the initial learning included foreign actors and FDI. The cases of Chile and Malaysia consequently show the possibility of escaping the middle-income trap not through manufacturing but instead through resource-based development. Such strategy differs from the so-called short cycle technology-based catch-up by the East Asian tigers and from the unsustainable commodity rent-extraction in resource-rich countries, but is consistent with the view that emphasizes the need to specialize in sectors with low entry barriers, and to promote investments in innovation and technological capabilities.

Ülkelerin ekonomik kalkınma süreçlerinden nasıl geçtiğini anlamak için ekonomistler ve araştırmacılar sürekli bu konular hakkında inceleme yapmaktadırlar. Bunlardan birisi de orta gelir tuzağı olgusudur. Orta gelir tuzağı, kişi başına düşen milli gelir bakımından orta gelir grubundaki ülkelerin kendi seviyelerinde tıkanıp kalması ve yüksek gelirli ülkeler grubuna geçememesi olarak tanımlanmaktadır. Bunun için Balkan ülkelerinin orta gelir tuzağında olup olmadığı araştırılmak istenmektedir. Bu amaçla kişi başına düşen milli gelir serisinin durağanlık sınaması yapısal kırılmalı panel birim kök testi ile gerçekleştirilmiştir. 2000-2019 dönemini kapsayan yıllık veriler için yapılan analiz sonuçlarına göre Balkan ülkelerinin orta gelir tuzağında olduğu görülmektedir. Yani kişi başına gelirde bir dengeleme ve ekonomilerinin rekabet gücünde bir düşüş veya durgunluk olduğunu göstermektedir. Bunun için politika yapıcıların; tarımdan sanayiye daha hızlı bir dönüşüm, daha yüksek ihracat payları, daha düşük enflasyon, eşitsizlik ve bağımlılık oranlarında azalma gibi konulara daha hassasiyetle yaklaşmaları ve tedbir almaları gerekebilmektedir

Indonesia mengalami bonus demografi sepanjang tahun 2017—2030. Namun, momentum bonus demografi yang dialami Indonesia dibarengi dengan mulai berkembangnya revolusi industri 4.0. Permintaan tenaga kerja menurun karena adanya artificial intelligence dan advance robotics yang menggantikan tenaga manusia. Sehingga resiko terjadinya pengangguran menjadi lebih tinggi. Hal ini memperparah keadaan Indonesia yang sedang terjebak dalam middle-income trap. Padahal negara lain dapat memanfaatkan bonus demografi sehingga dapat mendorong perekonomian. Penelitian ini mengungkap eksistensi middle income trap pada level provinsi berdasarkan sisi kapasitas ekonominya dengan membentuk indeks middle income trap. Selain itu, menguji secara statistik apakah tingkat pengangguran yang tinggi ini akibat adanya bonus demografi menyebabkan Indonesia belum dapat keluar dari middle income trap. Selama periode 2015—2018, terdapat 20 provinsi yang terjebak dalam MIT dan 14 provinsi yang tidak mengalami MIT. Hasil penelitian menunjukkan bahwa tingkat pengangguran usia dewasa dan rasio gini berpengaruh positif dan signifikan terhadap indeks MIT, sedangkan pembentukan modal tetap bruto, angka partisipasi kasar perguruan tinggi, dan pertumbuhan nilai tambah bruto sektor manufaktur berpengaruh negatif dan signifikan terhadap indeks MIT.

The internal consumption and production structure of the service industry that now dominates the Chinese economy needs to be optimized. Introducing supply-side structural reform to improve the in-d...

Poland, although a few years ago was indicated among the countries that were in danger of falling into the middle income trap, nowadays in most studies is counted among the rich countries. Poland was examined in this article as a successful case of "escaping from middle income trap". This article searched for the keys to the success story of Poland among its trade patterns. In the analysis the author used the product space approach first developed by Hidalgo et al. (2007), and added to it market analysis, mainly using the growth-share matrix of the Boston Consulting Group, first formulated by Henderson (1970). The results show that Poland is achieving a healthy transformation towards medium technology automotive and engineering products and some high technology products. To improve its position in world markets, Poland should also carefully examine the market structure of its exports.

While the Middle-Income Trap (MIT) has gained popularity in Europe, Asia and America in the past 15 years, little data exists about its impact on Africa. This is because, until recently, Africa had recorded minimal economic growth. However, since the year 2000, several African countries have recorded rapid economic growth to attain middle-income status, but very few have transitioned to high-income levels. This study aimed to establish Zambia’s standing regarding the MIT. A unit root model was used to test for income convergence between Zambia and the United States of America (US). In line with the study model, income convergence is equivalent to the absence of unit root in the natural log difference in per capita income between the US and Zambia. The Augmented Dickey-Fuller, Phillips-Perron test which accounts for serial correlation and GLS detrended augmented Dickey-Fuller test were used to test for the unit root. All tests identified unit root indicating the lack of GDP per capita convergence between Zambia and the US. These results indicate Zambia is at a high risk of falling into MIT. To break from the MIT, Zambia should diversify its economy and shift from input led growth to growth based on economic efficiency. The lack of sustained economic growth in Zambia is due to 1) the inability to identify new growth drivers at the middle-income stage, 2) failure to institute the required political and institutional reforms to sustain growth at MIC level.

Until after the year 2000, there has been limited economic growth in Sub-Saharan Africa. While several countries in this region have attained middle-income status and are among the fastest-growing economies globally, many others have stagnated and risk falling back to low-income level. The paper aims to examine GDP per capita economic convergence of 35 Sub-Saharan countries using a unit root model. Second, we isolate countries showing good GDP per capita convergence and reviewed each country to draw out common successful elements as lessons for Zambia. Only six out of the sampled 35 countries have slightly converged towards the United States of America. From the six countries’ in-depth review, three key success elements come out as recommendations for Zambia. These include 1) Prudent management of mineral resource endowments such as copper and diamonds. Proceeds from mineral wealth should be reserved for use during hard years and to diversify the economy. 2) Strong focus on agricultural mechanization and support to smallholder farmers to ensure complete agrarian transformation. While the share of agriculture is expected to reduce as the economy grows, such a decline should only happen once the secondary sectors are fully developed. 3) Fiscal discipline in government spending, coupled with a free-market economic system, is a key to sustaining Africa’s growth.

It has been taken for granted for a long time that the main objective for economies has to be to maintain economic growth. Economic growth, however, especially when measured by gross domestic product (GDP) can be attractive while human and social conditions deteriorate. Globalisation has created global value chains, which are basically about locating activities into countries where they can be performed at the lowest costs. These processes can hold back economies from moving towards a higher level of development. The article examines the economic and social situation in the V4 countries in international context and on a long time horizon, by using the most important economic and social indicators. The main purpose of the analysis is to get an objective overview of the situation, and to suggest solutions to achieve a more harmonious economic and social development, which is the necessary precondition for avoiding middle income trap.

In this paper, we investigate the macroeconomic, demographic and institutional factors affecting the probability of growth slowdown in upper-middle-income countries within the framework of the growth slowdown methodology developed by Eichengreen et al. (2011). To do so, we use probit regression, and the dataset covers the period 1980-2015. The results show that growth slowdown occurs when per capita income reaches 22 percent of that in the United States. Besides, an increase in the relative income, gross capital formation, trade openness, years of total schooling, old dependency ratio and law and order index increases the risk of growth slowdown, whereas an increase in public debt, inflation variability and years of secondary and higher schooling decreases the risk of growth slowdown.

The international remittances by immigrants to their home countries is one of the key sources of funding development in middle-income countries, especially in migrant-sending countries. This study assesses the determinants of international remittances using panel data from 22 Asia-Pacific middle-income countries, most of which are well-known migrant-sending countries, using the generalized method of moments (GMM) method. The results show that the gap in the per capita GDP growth rate between origin and destination countries, gross enrollment ratio of secondary education, and trade openness are positively associated with remittance inflow. On the other hand, net foreign direct investment (FDI) inflows are negatively correlated with remittance inflows. The results of this study can be interpreted as a paradigm shift for acquiring foreign capital in middle-income countries, from remittances in earlier stages of development to more FDI inflows when the country has the pre-requisites for absorbing foreign capital. The remittance inflows should be highly important, especially in the early stage of economic development, as additional incomes, or investment sources for those who live in middle-income countries.

Recently, the middle-income trap (MIT) has gained considerable attention – besides European countries, several African, Asian, and Latin-American developing countries are also affected. Many countries have remained in the middle-income bracket for decades, whilst only a few have advanced to high-income status. Felipe et al. in 2012 showed that an annual growth rate of at least 3.5 and 4.7% sustained for a period of 14 and 28 years is required respectively for upper-middle-income and lower-middle-income countries to escape the MIT. Economic growth is influenced by several factors including foreign aid received. Thus, in this study, we aim to answer the question of how aid affects economic growth in middle-income countries and whether aid may contribute to escaping the MIT. Focusing on the countries that have remained in the middle-income group between 1990 and 2017, our analysis confirms that aid contributes to economic growth; however, the impact is positive in the upper-middle-income countries and negative in the lower-middle-income countries. Aid is therefore, likely to be more effective in helping the upper-middle income countries to escape the MIT but not the lower-middle income countries.

This paper studies the evolution of the Chilean economy in the late 19th and early 20th century, a period when the country's convergence with developed countries came to an end. We analyse this problem in the context of the modern literature on the middle-income trap. The social, political and economic history of Chile between 1875 and 1939 is examined and the presence of most of the factors associated with the middle-income trap is found. We complement this narrative through a quantitative analysis based on the synthetic control method and argue that the process of state-led industrialisation undertaken in the country leading to the formation of CORFO was a key economic and political event. Our work presents some general lessons for developing countries facing a similar context.

The middle-income trap (MIT) describes systemic growth obstacles shared by various countries that occur typically at the middle-income level of their development. The following analysis relies on Rostow’s classification of the stages of economic development. We focus on Rostow stages three and four, where moving from labor intensive, import and foreign direct investment (FDI) driven growth to reliance on high value-added output and exports with embedded high content of capital and technology can render sustainable long-term growth problematic. To examine MIT we study Poland, which has relied on relatively low labor costs, imported technologies, funding from the European Union and FDI to attain middle-income status. A recent slowing in Poland’s growth may signal that it has exhausted some of these growth factors and is more vulnerable to MIT. To assess this vulnerability, we analyze changes in Poland’s factor productivity, investment patterns, FDI, labor force educational attainments, new technology/product development, imports, export diversification, product complexity, and other factors. We conclude that certain conditions consistent with MIT are gaining importance in Poland and represent a challenge to its future economic growth.

In our paper, we modify the concept of the middle-income trap (MIT) against the background of the Fourth Industrial Revolution and the (future) challenges of automation (creating the concept of the “MIT 2.0”). In particular, we analyze the impacts of automation, artificial intelligence, and digitalization on the growth drivers of middle-income countries and the MIT mechanism. We show that automation reduces the initial growth push for developing countries and leads to an earlier MIT at the lower end of the middle-income range. In addition, once wages start rising, the necessary shift in the growth strategy (from an export-manufacturing based to an innovation-productivity based growth model) is afflicted with higher requirements, particularly regarding human capital. This in turn, will lead to a higher persistence of the trap and it will become more difficult to break out of it. Thus, the MIT 2.0 will be much more challenging than today’s “normal” MIT. Our findings suggest that improving human capital accumulation, particularly the upgrading of skills needed with the rapid advance of automation, will be key success factors for overcoming the MIT 2.0. Against this background, we elaborate the implications for developing Asia regarding their probability to experience an MIT 2.0 (with a special focus on human capital as well as higher cognitive and information communication technology skills).

This paper studies the effect of high‐speed rail (HSR) on urban economic growth using a panel data comprising 285 Chinese cities in 2007–2017. Combining the endogenous growth model with a difference‐in‐difference analysis, we extend the horse‐mass theory to explain how China may use HSR to avoid the so‐called middle‐income trap. The paper also examines the efficient boundaries of HSR and simultaneously studies HSR time–space compression as well as the city neighboring effects on economic growth. It is found that HSR's efficient boundaries are within the range of 200–1,200 km for provincial capitals and 50–300 km for prefecture‐level cities. HSR stimulates economic growth by approximately 0.6 percent, and the neighboring effect accounts for one‐quarter of economic growth. Three policy implications are drawn: (i) China needs to further reduce the travel times between the inland provincial cities and Beijing, Shanghai or Guangzhou; (ii) China should build a denser HSR network to maximize its economic impact on the vast majority of cities; (iii) China needs to develop some powerful economic growth centers in the inland areas to lead the development of their neighboring cities.

From its starting position as one of the world’s poorest countries at the onset of economic reforms, Vietnam has, over the last 35 years, been embracing the market economy and, as a result, has leapfrogged to its current position as a middle-income country while, at the same time, achieving impressive social outcomes. Transforming a poor country to a middle-income one over a comparable period of time is something many countries in the world, especially in Asia, have achieved. Few countries, however, can maintain rapid growth after such an economic leap and end up falling into the so-called “middle income trap”. Vietnam is thus seemingly at a crossroad; wherein, contemporary choices will affect the future prosperity. Reform efforts over the past decades have brought Vietnam onto a trajectory of rapid growth and have inspired its citizens to look to prior successful models of economic development, such as South Korea, Malaysia and China. This paper reviews the development models that Vietnam could consider in its efforts at becoming a prosperous and harmonious country by 2045. The authors have selected a number of successful examples that are similar to Vietnam. Based on the analysis of the commonalities and characteristics of three countries’ development models and strategies, the paper also presents four possible scenarios for Vietnam’s economic growth between 2030 and 2045. The rationale for choosing a path for Vietnam is based on a comparison of similarities and differences in the socioeconomic backgrounds of Vietnam and those countries at critical periods in their developmental paths.

It is critical for China to develop its domestic market demand and to engage in technological innovations to escape the Middle Income Trap. However, evidence suggests that China has been experienci...

This paper suggests a new testing procedure to systematically examine the middle-income trap (MIT). To empirically demonstrate this procedure, one high income and 14 middle-income countries are examined using newly developed unit root tests — Fourier ADF with structural break (FADF-SB) and Seemingly Unrelated Regressions Fourier ADF (SUR-FADF). The FADF-SB test incorporates unknown nonlinearity and smooth break in the time-series, while the SUR-FADF test accounts for cross-sectional dependency. The empirical findings produced mixed results: 10 countries have a relatively high possibility of facing the MIT problem, while only one country has a relatively low possibility of facing the problem. For the remaining three countries, it is uncertain whether they will face the problem of MIT. These empirical findings have significant policy implications.

This study aims to investigate whether E7 and Fragile Five countries are in the middle-income trap or not by using various methods and comparison techniques. The study is based on the classification created by Felipe, Abdon and Kumar using the middle-income trap threshold values approach by obtaining growth rates, income transitions and times over historical data of countries. This study first focuses on the approaches that lay down the theoretical basis of the middle-income trap. In the following sections, in order to explain the middle-income trap in the context of quantitative indicators, various approaches such as the threshold approach. Furthermore, the overall assessment is made after comparing the GDP per capita of those countries with the average world middle income GDP per capita. In the light of the middle-income trap definition of being stuck at 20% of per capita GDP of the USA, the per capita GDP of respective countries are compared against the per capita GDP of the USA. In addition, in line with the approach that takes the world average per capita income as the basis for middle income, the per capita GDPs are compared against the world average per capita GDP values, and relevant assessments are made.

This study revisits economic growth from the perspective of technological capability types and the transition related to growth slowdowns in middle-income countries. The objectives of this study are twofold. First, we reveal the development pattern of national technological capabilities in the global market by means of two capability indices. Second, we investigate the heterogeneous contribution of these indices to economic growth by income level. To this end, we first propose an analytical framework that evaluates two types of technological capabilities, that is, implementation capability and design capability, developed by different knowledge types and learning modes. Using the calculated indices with a sample of 42 countries from 1996 to 2016, we conduct econometric analysis via Granger causality testing between the two capability indices, a dynamic panel regression of the global connections on the capability development, and a panel quantile regression on income per capita. Our results show that: (1) the sequential pattern of national technological capability development from the implementation-based to the design-based; (2) a positive influence of higher global connections on the capability development; and (3) an increasing contribution of design capability towards economic growth but a decreasing contribution of implementation capability when approaching the higher quantiles of the income level. Finally, our study’s implications concern the process of sustained economic growth and the fundamental cause of the middle-income trap—specifically, the need for capability transition.

The 4IR can open windows of opportunity for emerging economies but also raises red flags in terms of the main challenges that these changes pose to firms, industrial systems and policy approaches. ...

This paper analyzes the probabilities of economies to lie into the middle-income trap by using a Logit Panel Data model. We define the trap with more encompassing criteria: average GDPs per capita relative to the US one and GDP per capita growth rates for ten-year averages in both cases. To determine those probabilities, we include two different sets of covariates. Firstly, a set of covariates that might be influenced by policymakers, e.g., inflation, exports, and education. Secondly, another set of covariates that are independent of policymakers’ influence; a trend, a dummy for the international financial crisis, growth rates of world leader economies (US and China), growth rates of continental leader economies, and dummies by continents. We find that domestic variables are essentialto determine the probability of lying into the middle-income trap. Also, the independent covariates are significant. The trend shows that the trap is a stable equilibrium where economies tend to stay for a long time. A global economic crisis can push the countries out of the trap, but the impulse makes them back to lower-income stages. Our model also finds that regional linkages with surrounding economies are essential for middle-income economies Keywords: Middle-Income Trap, International Economics, Logit Models, Panel Data

This paper offers an alternative explanation to the slow-down observed in the growth of developing countries. Instead of a middle-income trap what happened was a liberalization trap. Growth didn't happen because countries turned middle-income, but happened in a given period, around the 1980s, when these countries faced a serious foreign debt crisis and were constrained to open their economies. The studies on the middle-income trap have adopted a broad income interval and were unable to offer new historical facts that explained why these countries stop growing fast. Differently, this paper shows that the trade liberalization and the financial liberalization that started in the 1980s involved the dismantling of the mechanism that neutralized the Dutch disease and the change from low to high interest rates – both facts leading to a long-term or chronic overvaluation of the exchange rate that made the manufacturing industry non-competitive and caused deindustrialization and low growth.

Motivated by several stylized facts about middle-income trap, we develop a simple multi-sector general equilibrium model of structural change and industrial upgrading. The model features the distinction between production service and consumption service and the input-output linkages between different sectors. We show that the role of production service is asymmetric at different levels of development. Whereas an underdeveloped sector of production service is not a binding obstacle for development (sometimes even beneficial) at an early stage of development, it becomes a key bottleneck when the economy reaches a middle-income status. To escape the middle-income trap, government intervention is needed to prevent premature de-industrialization and facilitate beneficial industrial upgrading. Moreover, it also requires a timely reduction of entry barrier to the production service and improvement in its productivity. These theoretical findings are shown to be consistent with the stylized facts and also useful to China. The analysis provides a justification for the government’s strategic use of industrial policies to avoid middle-income trap.

Çin 1970’li yıllar ile başlayan dışa açılma politika uygulamaları ile giderek güçlenen bir küresel aktör rolünü üslenmektedir. Bu süreçte üretim, ticaret, inovasyon, enerji kullanımı ve ulusötesi sermaye konularında yaşadığı çarpıcı gelişmeler ve ortalama en hızlı büyüyen ülke olmanın getirdiği avantajlar neticesinde Çin’in küreselleşmede mevcut hegemonyayı ele geçirmek gibi bir niyetinin ve gücünün olup olmadığı konusu, bu makalenin ana sorusunu oluşturmaktadır. Bu nedenle makalede Çin’in işçi maliyetleri ile ortaya çıkan avantajlarının ve ülkedeki büyümenin, Lewis Dönüm Noktası (LTP) ve Orta Gelir Tuzağı kavramsal çerçevesiyle sorgulanması, özellikle küresel kriz sonrası oluşan koşullar gözönünde bulundurularak yapılmaktadır. Çalışmada, Çin’de Orta Gelir Tuzağının aşılması yolunda toplam faktör verimliliğinin arttırılması ve diğer önlemlerin yanısıra küresel kriz ve ABD-Çin Ticaret Savaşlarının Çin ekonomisine etkileri sorgulanmıştır., China is taking on the role of a global actor that has been strengthened with the outward policy practices that started in the 1970s. The main question of this article is whether it has the intention and power to take over the current hegemony in globalization as a result of the striking developments in production, trade, innovation, energy use and transnational capital and the advantages of being the fastest growing country on average. Therefore, the question of China's labor costs and advantages and growth with the Lewis Turning Point (LTP) and the Middle Income Trap has been dealt with, in particular, taking into account the post-crisis conditions. The effects of the global crisis and the US-China trade wars on the Chinese economy were questioned, among other things, to increase the total factor productivity in overcoming the Middle Income Trap.

There are many ways to discuss the essence of economic development associated with industrialization, technology catch-up, and innovation. The key question is why some societies move up rapidly to ...

Our intent is to reinterpret the concept of middle-income trap using the language of the complex system approach to refer to the unpredictability, non-linearity and the enormous range of possible behaviors of economic development in the long-term time series. By redefining the concept of trap in those terms, we propose to shed light on the institutional background of economic development. In order to advance our argument, we conduct a case study of Latin America, a region that has presented an unstable and non-linear economic trajectory across the 20th century. We argue that the combination between the colonial economic legacy and the political fragmentation amid the process of independence shaped the socio-economic structure and institutional capabilities for years to come, restricting the possibilities of overcoming underdevelopment. Resumo O artigo busca reinterpretar o conceito de armadilha da renda média utilizando a linguagem de sistemas complexos para abordar a imprevisibilidade, a não linearidade e a enorme variedade de comportamentos possíveis de desenvolvimento econômico em séries temporais de longo prazo. Ao redefinir o conceito de armadilha nesses termos, propomos lançar luz sobre o contexto institucional do desenvolvimento econômico. Para avançar o argumento, realizamos um estudo de caso da América Latina, uma região que apresentou uma trajetória económica instável e não-linear ao longo do século XX. Argumentamos que a combinação entre o legado econômico colonial e a fragmentação política em meio ao processo de independência, moldou a estrutura socioeconómica e as capacidades institucionais futuras da região, restringindo as possibilidades de superação do subdesenvolvimento.

The article provides an overview of the collective monograph on the analysis of science, technology and innovation in countries. A brief analysis of the contents of the book carried out, as well as its relevance and general ideas. The book is set in a modern international context associated with a wide range of possible problems in it. Of particular interest to the Russian-speaking reader is the fact that the book covers in detail the problems of science and technology in large Latin American states that have significant scientific and technological potential, but suffer from a number of managerial problems similar to those that have repeatedly arisen in Russian science. In the context of these questions, the monograph also considers the problem of the “middle income trap”, in which states, having reached a certain level of development, are unable to increase the rate of economic growth, which has its consequences for the scientific and technological sphere.

According to World Bank country classifications by income level, Turkey has been a middle income country since 1955. In the first stage of the study, whether the situation faced by the Turkish economy is a middle–income trap or not was investigated by applying one traditional and three structural break unit root tests to the annual range of GDP per capita of Turkey relative to USA. The annual time series spanning from 1960 to 2020 was found to be not–stationary in all unit root tests except for one of the unit root tests which allow for a structural break. On the other hand, the ratio of Turkey's per capita GDP to the reference country's (USA) GDP remained in the range of 0.08 – 0.36, which was considered as the relative threshold throughout the period examined. Although the findings do not provide conclusive evidence for the existence of the middle–income trap, they indicate that Turkey is at risk of facing it. In the second stage of the study, the long– and short–run relationship between the convergence of Turkey and USA GDPs, and trade openness was investigated using annual data for the period 1990–2021. Exports and imports of manufacturing industries products and agricultural products as a percentage of GDP, the ratio of exports to imports, and the real effective exchange rate were included as explanatory variables in the ARDL bounds model applied. The findings reveal that increases in the level of trade openness in Turkey cause the per capita GDP of Turkey and the USA to converge in the long–run. While the increasing share of agricultural products imports in total GDP cause divergence in the long–run, increasing the share of manufacturing industry products imports cause divergence in both the long– and short–run., Dünya Bankası’nın kişi başına GSYH ülke sınıflandırmasına göre Türkiye 1955 yılından araştırmanın yapıldığı 2021’e kadar geçen dönemde orta gelirli ülkeler grubunda yer almıştır. Bu çalışmada öncelikle Türkiye ekonomisinin karşılaştığı durumun orta gelir tuzağı olup olmadığı Türkiye ve referans ülke olarak alınan ABD GSYH’lerinin 1960 – 2021 dönemindeki yıllık farklarına bir geleneksel ve üç farklı yapısal kırılmalı birim kök test uygulanmak suretiyle araştırılmıştır. Bir yapısal kırılmalı test dışındaki tüm birim kök sınamalarının bulguları serinin durağan olmadığını göstermiştir. Diğer taraftan Türkiye’nin kişi başına GSYH’sinin referans ülke ABD GSYH’sine oranı ilgili dönem için nispi eşik olarak belirlenen 0,08 – 0,36 aralığında kalmıştır. Bulgular Türkiye’nin orta gelir tuzağına takıldığına dair kesin kanıtlar sağlamamakla birlikte bu riskin söz konusu olduğuna işaret etmektedir. Daha sonra Türkiye ve ABD GSYH’leri yakınsaması ile ticari açıklık, imalat sanayi ürünleri ithalatı ve ihracatı, tarımsal ürünler ithalatı ve ihracatı, ihracatın ithalatı karşılama oranı, reel efektif döviz kuru arasındaki uzun ve kısa dönem ilişkiler 1990–2021 dönemi yıllık verileri kullanılmak suretiyle araştırılmıştır. Uygulanan ARDL sınır testinin bulguları ticari açıklık düzeyindeki artışların uzun dönemde Türkiye ile ABD kişi başına GSYH’lerinin yakınsamasına neden olduğunu göstermektedir. İmalat sanayi ürünleri ithalatının toplam GSYH içindeki payındaki artışlar hem uzun hem de kısa dönemde, tarımsal ürünler ithalatının payındaki artışlar ise uzun dönemde ıraksamaya yol açmaktadır.

Only a handful of economies have successfully transitioned from middle to high income in recent decades. One such case is Spain. How did it achieve this feat? Despite its relevance to countries that have yet to complete that transition, this question has attracted only limited attention. As a result, Spain’s development into a prosperous society is a success story largely underreported and often misunderstood. This book turns on their head the questions that usually frame the debate about Spain’s economic development. Instead of asking why Spain’s catching up was delayed, this book asks how it happened in the first place. Instead of focusing on how bad institutions undermined economic prospects, as the literature has done, this book explains how growth took place even in the presence of poor institutions. This wider lens opens up new perspectives on Spain’s development path. For example, comparisons are drawn not only with the richest countries but also with those that were in a similar stage of development as Spain. Drawing on a wide range of material, from archival sources to text analytics, the book provides a new account of why reforms were adopted, the role of external and internal factors, as well as that of unintended consequences. The result is an original interpretation of the economic rise of Spain that speaks also to the wider literature on the political economy of reform, the role of industrial and public policy more broadly, and the enduring legacy of political violence and conflict.

South Africa has been experiencing premature deindustrialization and poor growth over an extended period of time. Premature deindustrialization is among the key factors locking many middle-income countries in a trap of stagnant growth and thwarting their catching-up with advanced economies. Premature deindustrialization shrinks middle-income countries’ opportunities for technological development, and also their capacity to add value in global value chains (GVCs), which reduces their scope for the sustained increases in productivity required for catching up. This chapter analyses key structural factors contributing to a ‘middle-income technology trap’. Throughout the chapter, reference is made to the divergent experiences of three middle-income comparator countries to South Africa: Brazil, China, and Malaysia. Building on this framework, the chapter presents new econometric evidence of premature deindustrialization in South Africa through an international comparative lens. By studying the relationship between countries’ GDP per capita and their shares of manufacturing in total employment, the chapter identifies the level of GDP per capita and share of manufacturing in total employment associated with the ‘turning point’ at which the share of manufacturing levels off and begins to decline. The chapter groups countries into four categories based on their (de)industrialization dynamics, and identifies possible premature deindustrializers, among which South Africa is found. South Africa’s lack of structural transformation helps to explain its failure to escape the middle-income technology trap.

From a developmental perspective, South Korea would seem to have long ago put the challenges of the Middle Income Trap behind it. This supposed economic Miracle on the Han River has been ma...

By the end of 2013, Russia’s economy has entered a recession, which resulted from a combination of fundamental (the middle-income trap) and market (international sanctions and a reduction in the price of oil) factors reinforced by the Dutch disease. The economy found itself in a state of negative stabilization caused by a prolonged depression and leading to a stable equilibrium with low economic indicators. Consequently, Russian macroeconomic regulators now have to search for macroeconomic tools, which would be able to put the economy onto a way of sustainable growth. The paper aims to provide the rationale for the choice of structural policy tools and analyse their combination with the careful use of traditional monetary and fiscal policy tools. The methodological basis of the paper includes the models of resource-dependent economy as well as the empirical studies of reactions of such economies to the implementation of macroeconomic tools. The authors justify the necessity of returning to industrial policy as a fundamental tool for regulating economic growth and attempt to demonstrate the vulnerability of the Russian economy to the middle-income trap worsened by resource dependence employing the methods of comparative graphical analysis and correlation analysis. The trajectory of the economy proposed by the researchers in order to handle the situation implies a balanced use of traditional tools based on empirical evaluation of their impact on economic growth in similar conditions, which is feasible in the practice of macroeconomic regulation.

International audience; Vietnam has become a lower middle-income country in less than 30 years, and is now facing the middle-income trap risk. Knowledge of changes in total factor productivity (TFP) is an essential element in assessing this risk. An in-depth analysis of the evolution of TFP and its determinants in Vietnam is presented in this paper. TFP evaluation uses a recently proposed multiplicative-complete economically ideal index, namely the Färe–Primont index, to evaluate TFP and to decompose it into its different components: technical change, pure technical, mix and scale efficiencies. TFP is computed at the provincial level over the 2010–2017 period. The results shows that estimated provincial TFP values are, on average, small whatever the considered year, but they have increased with an annual compound growth rate of 3.46%. Technical progress as measured by TFP* appears to be the main driver of TFP growth over the period, with an annual compound growth rate of 3.34%. The expansion of the production set under constant returns-to-scale, from which TFP* is measured, is guided by movements of Ho Chi Minh city. Accordingly, on average, overall productive efficiency stagnated, with an annual compound growth rate of 0.12%. Technical efficiency has also stagnated over the period with its annual compound growth rate -0.62%. The results imply that there has been an increasing gap between provinces in terms of the resource allocation efficiency. This evolution may have negative consequences on sustainable economic development and lead the country into the risk of middle income trap in the future.

Thailand's real gross domestic product growth has fallen to a permanently lower trend, making it the worst performer in the Southeastern Asian region. The export sector, the country's long‐standing growth engine, has sputtered due to the declining competitiveness of the manufacturing sector. Chronic political instability during the last two decades has resulted in the adoption of short‐sighted policies, in particular, populist policies designed specifically to garner votes rather than improve the long‐term productivity of the business sector. The military coup was expected to restore political stability and end costly populist policies introduced by elected civil governments. Unfortunately, as the military government develops its long‐term political aspirations, it, too, seeks the assistance of populist policies to ensure its political success. Thailand has promulgated laws and regulations to ensure fiscal discipline, but it has yet to be seen whether the letter of the law can help prevent such populist policies in practice.

Most developing countries, especially transitive economies, face the problem of incapability to significantly increase the value of the national product. This article provides arguments that a fruitful approach to elaborate its challenge is Schumpeter’s theory of innovation economic development. Schumpeter’s little-known methodological invention is analyzed, i.e. that ‘innovations’ are an isolated factor of the catch-up economic growth. Such an approach allows getting to better recognizing the leading role of the strong innovation activities in the catch-up economic policy. The successful economies confirm this invention of Schumpeter and demonstrate that innovation activities provide the desired economic development of the emerging countries. The main findings of this article reveal a conceptual meaning of Schumpeter’s category of ‘innovations’ as an isolated crucial factor of economic development which creates a new added value and distinguishes the phenomenon of ‘innovation’ as a separate factor of economic development in traditional models of economic growth. It becomes very important to recognize the crucial role of the innovation economic policy that supports enterprises with new advanced technology and promotes the high-tech industries development in order to reach dynamic economic growth and to overcome the problem of the ‘middle income trap’ for the emerging market economies, including Ukraine. The methodological possibility to use the innovation policy as a special factor of the catch-up processes in order to enhance country competitiveness is demonstrated.Article received 30.04.2019

This study observes how the opportunities of middle-income countries located in ASEAN avoid the Middle Income Trap. Human Development Index, Foreign Direct Investments, Goods and Services Exports, and the Government Effectiveness Index are regressed to GNI per capita with panel analysis. Secondary data are used and was published officially by the World Bank and the United Nations Development Program (UNDP) in 5 ASEAN Regional Countries, namely Indonesia, the Philippines, Malaysia, Thailand and Vietnam in the period 2004-2017. Also, this study discusses the contribution of the Incremental Capital Output Ratio (ICOR) coefficient to Gross Domestic Product. The results of the study state that there are significant and positive effects of the independent variables on the dependent variable. Expected that, it's essential to give priority to macroeconomics as a result of this research. For Advanced Research, you can use bonus demographic and investment variables to provide forecasting to avoid the Middle Income Trap.