Modern Exchange-Rate Regimes, Stabilisation Programmes and Co-ordination of Macroeconomic Policies

Silva, Maria Luiza FalcÃo

doi:10.4324/9780429451607

Cited by 1 publication

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“…Many economies can easily grow from a low-income country to middle-income country, but it is difficult to cross the middle-income stage and become a high-income country. Latin American countries such as Brazil, Argentina, and Mexico jumped from low-income countries to middle-income countries in a very short period, creating a miracle of growth in the national economy and per capita income, but they experienced economic regressions one after another between 1970 and 1980 (Silva, 2018). Among Asian economies, only Japan has successfully overcome the "middle-income trap" and achieved a leap in economic development.…”

Section: Introductionmentioning

confidence: 99%

Evidence of the Middle-Income Trap in Latin American Countries: Factor Analysis Approach Using Regression and the ARDL Model

Galvan

Campo²,

Stanojević³

et al. 2022

Front. Environ. Sci.

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The middle-income trap (MIT) is often accompanied by the decline or stagnation of economic growth, unreasonable domestic industrial structure, and serious polarization between the rich and the poor. However, due to different international environments, different specific national conditions, and different development policies adopted by each country, how to get out of the MIT varies. This study carries out an analysis of different economic growth factors of Latin American countries (we selected 19 MIT countries out of 33) and compared them with Singapore and Korea, which are in a high-income range. We used a regression model to find the relationship of variables in each country and the impact on the economic growth due to these variables. The study finds using correlation and regression analysis, that trade and foreign direct investment (FDI) play a major role in avoiding the MIT by having a strong regression (R2 = 1.481*** for S. Korea, R2 = 0.65 for Singapore) with the gross domestic product (GDP) for high-income countries while having a weak regression in Latin American countries. Another factor is that industrialization and services export play a vital role in avoiding the MIT in Singapore and South Korea, and the same model should be used in Latin American countries to avoid the MIT. Furthermore, using the panel ARDL model we validated the results of a regression model and established that similar factors are impacting Latin American countries’ MIT. Correlation analysis is used to determine the relationship of selected factors and their impacting strength on the growth of an economy. In the final section, we present Latin American countries, and their main policy gaps according to their unique characteristics and recommend a policy with suggestions for avoiding the MIT by comparing their economies with those of high-income countries.

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Section: Introductionmentioning

confidence: 99%