The risks of falling into the Middle Income Trap have increasingly become a focus of discussions on the long-term economic and social development prospects of developing countries. These risks, and how to minimize them, are being debated at the highest levels of policy making in some of the fastest growing emerging economies, even while these countries remain a source of envy to the rest of the world. The term Middle Income Trap is by now also being widely used in economic literature as well as business-oriented media. We draw satisfaction from the fact that some of our previous writings (Gill and Kharas, 2008; Kohli et al. 2009) (co-authored with other colleagues) seem to have helped popularize this term. At the same time, we realize that some have interpreted and used the term quite differently from what we had in mind when we first introduced the term Middle Income Trap in our writings and presentations. This article offers our perspective as to what the Middle Income Trap is, why so many countries fall into it, and the key challenges involved in avoiding the trap. With policy makers as its primary audience, the article is deliberately short in length and straightforward in language.
The Belt and Road Initiative (BRI) is a potentially transformational geopolitical development initiative, launched by China, which encompasses 65 countries, accounting for roughly 32 percent of global GDP, 39 percent of global merchandize trade, and 63 percent of the world's population. The BRI, also referred to as the Silk Road Economic Belt (SREB) and the twenty-first century Maritime Silk Road (MSR), is a geopolitical initiative put forth by Chinese President Xi Jinping, which goes well beyond building infrastructure along the ancient "silk road." The initiative seeks to develop a wide network of connectivity and cooperation spanning the entire Eurasian land mass and parts of Africa, including Central Asia, Southeast Asia, South Asia, the Middle East, Europe, and North and East Africa. The magnitude of investments anticipated under the BRI is massive. According to the Chinese government, US$890 billion worth of investments have already been disbursed under the BRI umbrella, with an expected total Chinese investment of US$4 trillion over the course of the initiative. Developments suggest that BRI could ultimately evolve beyond a mere Chinese-financed initiative. However, the bulk of BRIrelated investments still appear to be conceived, driven, and primarily financed by China and financial institutions controlled by Beijing. This could change, however, as national governments that host BRI projects, multilateral institutions, and private sector gets more actively involved.
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