After years of rapid growth, many countries in Asia have advanced to middle-income status. The transition from middle income to high income, however, can be a slow process. Here are 12 things to know about overcoming the so-called middle-income trap in the region.
- Out of 45 developing members of ADB, 33 Asian economies have achieved middle-income status, and 5 are in the high-income group.
Source: Speech by ADB President Takehiko Nakao. 2013. Tokyo, Japan. Opening remarks at the ADB Institute Annual Conference - Countries fall into the middle-income trap if they are unable to move from a low-cost to a high-value economy, making it difficult for them to compete with both low-income and high-income countries.
Source: ADB. 2012. Growing Beyond the Low-Cost Advantage: How the People's Republic of China Can Avoid the Middle-Income Trap - Many countries experience a growth slowdown after achieving middle-income status. More than 15 countries globally have been "middle income" for at least the past 50 years, including three in Asia - Malaysia, the Philippines, and Thailand.
Source: ADB. 2012. Growing Beyond the Low-Cost Advantage: How the People's Republic of China Can Avoid the Middle-Income Trap - The People's Republic of China (PRC) became an upper-middle-income country in 2010. While gross national income is rising quickly, it still has a long way to go before becoming a high-income country.
Source: ADB. 2012. Growing Beyond the Low-Cost Advantage: How the People's Republic of China Can Avoid the Middle-Income Trap - Industrialization must be an essential part of the growth formula if Asian countries want to prosper. Middle-income economies should focus on upgrading and diversifying their industrial base.
Source: ADB. 2013. Key Indicators for Asia and the Pacific 2013 - The rise of technology in manufacturing requires "gray collar" or "knowledge workers"' for higher value-added products that enable economies to avoid the middle-income trap.
Source: ADB. 2013. Skills for Competitiveness, Jobs, and Employability in Developing Asia-Pacific - Innovation is necessary to avoiding the middle-income trap as it raises productivity and promotes structural change. To promote innovation, Asia must invest in education and research and development.
Source: Speech by ADB President Takehiko Nakao. 2013. Tokyo, Japan. Opening remarks at the ADB Institute Annual Conference - The rapid expansion of secondary and tertiary education helps to explain the successful transition of the Republic of Korea from middle- to high-income status.
Source: Op-Ed. 2013. Avoiding the Middle-Income Trap - Economic slowdowns are less likely in countries where high-technology products account for a large share of exports.
Source: Op-Ed. 2013. Avoiding the Middle-Income Trap - Moving from a low-cost to a high-value economy requires a critical mass of firms with strong incentives for innovation, as well as the government to create a conducive environment.
Source: ADB. 2012. Growing Beyond the Low-Cost Advantage: How the People's Republic of China Can Avoid the Middle-Income Trap - ASEAN middle-income countries should strengthen research and development capability, emphasize the quality and appropriateness of human resources, and improve the institutional system for nourishing a dynamic private sector.
Source: ADB Institute Working Paper. 2013. The Middle-Income Trap: Issues for Members of the Association of Southeast Asian Nations - For a lower-middle-income country such as Viet Nam, reforms and policies to increase the productivity of capital, land, and other resources are essential to avoid falling into the middle-income trap.
Source: ADB Institute Working Paper. 2013. The Middle-Income Trap: Issues for Members of the Association of Southeast Asian Nations