Transitioning from Low-Income Growth to High-Income Growth : Is There a Middle Income Trap?

Transitioning from Low-Income Growth to High-Income Growth : Is There a Middle Income Trap?

Is there a "middle income trap"? Theory suggests that the determinants of growth at low and high income levels may be different. If countries struggle to transition from growth strategies that are effective at low income levels to growth...

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Bibliographic Details
Main Authors:	Bulman, David, Eden, Maya, Nguyen, Ha
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank Group, Washington, DC 2014
Subjects:	AGRICULTURE ANNUAL CHANGE ANNUAL GROWTH ANNUAL INFLATION AVERAGE ANNUAL AVERAGE CHANGE AVERAGE GROWTH BASE YEAR CAPITAL ACCUMULATION CAPITAL STOCK CAPITAL STOCKS CAPITAL-LABOR RATIO CIVIL WAR CONDITIONAL CONVERGENCE COUNTRY CHARACTERISTICS COUNTRY GROWTH PERFORMANCE COUNTRY LEVEL CROSS-COUNTRY INCOME DATA SET DEBT DEMOCRACY DEMOGRAPHIC DEPENDENT VARIABLE DEVELOPING COUNTRIES DEVELOPMENT POLICY DIVIDEND ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC REFORMS ECONOMIC REVIEW ECONOMIC STRUCTURE EXPORTS EXTERNAL DEBT EXTERNAL SHOCKS FACTOR SHARES FERTILITY RATE FINANCIAL DEVELOPMENT FUTURE GROWTH GDP GDP PER CAPITA GINI COEFFICIENT GINI COEFFICIENTS GOVERNANCE INDICATORS GROWTH ACCELERATION GROWTH DETERMINANTS GROWTH EFFECT GROWTH LITERATURE GROWTH PERFORMANCE GROWTH POLICIES GROWTH RATE GROWTH RATES GROWTH REGRESSIONS HIGH GROWTH HIGH INCOME HIGH INCOME COUNTRIES HIGH INCOME COUNTRY HIGH INFLATION HOUSEHOLD SURVEYS HUMAN CAPITAL INCOME INCOME COUNTRIES INCOME DIFFERENCES INCOME DISTRIBUTION INCOME DYNAMICS INCOME GROUP INCOME GROUPS INCOME GROWTH INCOME LEVEL INCOME LEVELS INDUSTRIALIZATION INEQUALITY INEQUALITY DATA INFLATION INSTITUTIONAL CONSTRAINTS INTERNATIONAL COMPARISONS INVENTORY LAGGED GROWTH LOW INCOME MACROECONOMIC CONDITIONS MACROECONOMIC MANAGEMENT MACROECONOMICS MEDIAN AVERAGE MIDDLE INCOME MIDDLE INCOME COUNTRIES MIDDLE INCOME COUNTRY MIDDLE-INCOME COUNTRIES MONETARY ECONOMICS NEGATIVE COEFFICIENT OIL EXPORTERS OUTPUT PATENTS PER CAPITA INCOME PER CAPITA INCOME LEVELS PER CAPITA INCOMES POLICY DISCUSSIONS POLICY RESEARCH POLITICAL ECONOMY POLITICAL REGIME POOR COUNTRIES POSITIVE CORRELATION POSITIVE EFFECT PRIMARY EDUCATION PRO-GROWTH POLICIES PRODUCTION FUNCTION RAPID GROWTH RATE OF INVESTMENT REAL EXCHANGE RATE REAL EXCHANGE RATES REGIME CHANGES REGRESSION ANALYSIS REGRESSION RESULTS RELATIVE INCOME SERIAL CORRELATION TOTAL FACTOR PRODUCTIVITY UNDERVALUATION WAGE WORLD DEVELOPMENT INDICATORS WORLD ECONOMY
Online Access:	http://documents.worldbank.org/curated/en/2014/11/20373154/transitioning-low-income-growth-high-income-growth-middle-income-trap http://hdl.handle.net/10986/20614

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Summary:	Is there a "middle income trap"? Theory suggests that the determinants of growth at low and high income levels may be different. If countries struggle to transition from growth strategies that are effective at low income levels to growth strategies that are effective at high income levels, they may stagnate at some middle income level; this phenomenon can be thought of as a "middle income trap." This paper does not find evidence for (unusual) stagnation at any particular middle income level. However, it does find evidence that the determinants of growth at low and high income levels differ. These findings suggest a mixed conclusion: middle-income countries may need to change growth strategies to transition smoothly to high-income growth strategies, but this can be done smoothly and does not imply the existence of a middle income trap.

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