An alternative to the middle-income trap

Bresser-Pereira, Luiz Carlos; Araújo, Eliane; Peres, Samuel Costa

doi:10.1016/j.strueco.2019.11.007

Cited by 43 publications

(35 citation statements)

References 9 publications

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“…Despite the new empirical possibilities to reveal patterns of structural transformation, there is still scarce research on how the middle-income trap looks like from an economic complexity perspective (Jankowska et al, 2012;Hartmann et al, 2019). The term middleincome trap became synonymous with an economy based on cheap labour and/or natural resource abundance, which faces challenges in entering knowledge-based and high added value activities (Bresser-Pereira et al 2020). In that context, the middle-income traps refer to structural problems in terms of productive sophistication of an economy.…”

Section: Introductionmentioning

confidence: 99%

Why did some countries catch-up, while others got stuck in the middle? Stages of productive sophistication and smart industrial policies

Hartmann

Zagato

Gala

et al. 2021

Structural Change and Economic Dynamics

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Development studies on the middle-income trap have highlighted the challenges for developing economies to transform their productive systems from simple towards high valueadded activities. Here, we use trade data of 116 countries to quantify the stages of productive sophistication and reveal the critical phase that countries encounter at intermediate levels of economic sophistication. Our results reveal that only five countries (i.e. Ireland, Israel, Hungary, Singapore, and South Korea) overcame the gravitation towards simple products and fully transformed their economies towards complex products between 1970 and 2010. They successfully made use of windows of opportunities in the digital and electronics sectors through smart industrial policies that promoted endogenous skills and access to international knowledge sources. In contrast, countries like Brazil or South Africa still struggle with the gravitation towards simple economic activities, social fragmentation, and a lack of coherent industrial policies.

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Section: Introductionmentioning

confidence: 99%

Why did some countries catch-up, while others got stuck in the middle? Stages of productive sophistication and smart industrial policies

Hartmann

Zagato

Gala

et al. 2021

Structural Change and Economic Dynamics

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“…Brazil is currently in the process of tackling the second and the third traps. Brazilian economists propose a similar concept of the liberalization trap: trade liberalization leads to an increase in imports and a drop in exports of manufactured goods, financial liberalization -to a loss of control over capital flows, which in total results in deindustrialization and low economic growth (BresserPereira et al, 2020). The third set of traps will have to be tackled in difficult conditions of the pandemic and a new recession.…”

Section: Brazil In the Middle-level Development Trapmentioning

confidence: 99%

Brazil in the 21st century: A difficult path

Grigoriev¹,

Starodubtseva²

2021

RUJEC

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Brazilian economic reforms in 21st century have great importance for the international community, especially for other countries of the middle level of development. The authors believe that, in spite of all the difficulties and crises, Brazil has made a decisive step forward by reforming its social structure and retaining democracy. Social reforms (especially minimal wage) led to strengthening middle class, but also to elevating its social aspirations. At this dramatic junction the economic development of the country was aggravated by external shocks and unsuccessful budget policies. The complex interaction of social macroeconomic policies in Brazil with strong external shocks gives lessons to countries with similar characteristics. The pandemic and recession of 2020–2021 have made the path of development more complicated but there is room for optimism for Brazil in the long run.

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“…Notwithstanding the differences in the middle-income trap's definitions, the deduction is that it is a phenomenon in which there are slowdowns in the growth of developing countries. Put differently, it is an economic scenario in which countries tend to economically stagnate having initially got an impressive economic growth (Bresser-Pereira et al 2020). Hence, economic growth may be retarded or slowed down immediately the countries reach the middle-income status (Aiyar et al 2018).…”

Section: What Exactly Does the Middle-income Trap Stand For?mentioning

confidence: 99%