The Middle-Income Trap: Myth or Reality?

4 Pages Posted: 17 Sep 2018 Last revised: 29 Mar 2019

See all articles by Gregory Michael Larson

Gregory Michael Larson

World Bank

Norman Loayza

World Bank - Research Department

Michael Woolcock

World Bank - Development Research Group (DECRG); Harvard University - Kennedy School of Government; Harvard University - Harvard Kennedy School (HKS)

Date Written: March 1, 2016

Abstract

This note considers the most relevant literature and contends that, even if the ?middle income trap? is myth, it provides impetus for policy makers to reassess their strategies once the traditional sources of economic growth have diminished. Middle-income countries must find drivers of productivity, innovation, and competitiveness while strengthening the economic fundamentals that foster and stabilize growth. Reaching high-income levels is challenging, with a strong likelihood of growth slowdowns along the way. But stagnation is inevitable, and middle income countries must have patience to manage the transition responsibly, avoid pitfalls, and promote new opportunities.

Keywords: Economic Theory & Research, Private Sector Economics, Industrial Economics, Educational Sciences, Private Sector Development Law, International Trade and Trade Rules, Economic Growth, Marketing

Suggested Citation

Larson, Gregory Michael and Loayza, Norman and Woolcock, Michael, The Middle-Income Trap: Myth or Reality? (March 1, 2016). World Bank Research and Policy Briefs No. 104230. Available at SSRN: https://ssrn.com/abstract=3249544

Gregory Michael Larson (Contact Author)

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Norman Loayza

World Bank - Research Department ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Michael Woolcock

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
Mailstop MC3-306
Washington, DC 20433
United States
202-473-9258 (Phone)

HOME PAGE: http://econ.worldbank.org/staff/mwoolcock

Harvard University - Kennedy School of Government ( email )

Littauer-G-11G
Cambridge, MA 02138
United States
617-495-0911 (Phone)

HOME PAGE: http://ksgfaculty.harvard.edu/michael_woolcock

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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