The Middle-Income Trap: Definitions, Theories and Countries Concerned—A Literature Survey

Abstract

Abstract. In recent years, a growing body of economic literature has focused on the phenomenon of the so-called middle-income trap (MIT). The term usually refers to countries that have experienced rapid growth and thus quickly reached middle-income status, but then failed to overcome that income range to further catch up to the developed countries. This paper surveys the MIT literature. It begins by laying out different approaches to defining the MIT (with a focus on the distinction between absolute and relative approaches) and by presenting as well as classifying the most important empirical studies. After a short overview of the currently identified MIT countries, the article summarizes the main explanatory approaches, taking into account both the theoretical foundations and the empirically identified triggering factors. JEL: O10, O40

Middle income trap and factors affecting the risk of growth slowdown in upper middle income countries

“…As mentioned in the previous part, among these three conditions, especially the third condition has received criticism due to its high threshold value in the literature (Paus, 2014;Fryer and Cattaneo, 2014;Glawe and Wagner, 2016;Andrianjaka and Rougier, 2017). Due to the third condition, several developed countries such as Australia, Japan and the USA are included in the analysis, whereas many developing countries are left out.…”

Economic Convergence, Capital Accumulation, and Income Traps: Empirical Evidence

“…They defined growth acceleration as an increase in per capita income growth of 2 percentage points, conditional that it lasted for 8 years and the post-acceleration growth has to be at least 3.5 percent per year. 9 SeeGlawe and Wagner (2016) for a review of previous studies which used either absolute or relative approach in identifying middle-income countries.…”

The Role of Total Factor Productivity Growth in Middle-Income Countries

“…By examining the experiences of 80 countries, Yiping, Qin, and Xun (2014) suggested that, for the middle-income group, repressive policies on credit, bank entry, securities market, and the capital account significantly hinder economic growth. Glawe and Wagner (2016) argue that, except for the scenarios based on the World Bank (2013) study and some of Eichengreen, Park, and Shin (2012; scenarios which are based on borderline cases, most of the implied scenarios showed that the PRC is not yet at the MIT. The majority of their scenarios indicated that the PRC will soon enter into the middle-income country status, but not trapped in an MIT.…”