Middle-Income Transitions: Trap or Myth?
The phenomenon of the middle-income trap is problematic because it has not been defined and has not been studied theoretically. The idea of a trap implies that economies are stuck, which is not what this paper finds.
The historical evidence presented in this paper indicates that economies move up across income groups. Historically, it has taken a “typical” economy 55 years to graduate from lower-middle income to upper-middle income. Likewise, the authors find that, historically, it has taken 15 years for an economy to graduate from upper-middle income to high income. The analysis implies that as of 2013, there were 10 (out of 39) lower-middle-income economies and 4 (out of 15) upper-middle-income economies that were experiencing slow transitions, i.e., above 55 and 15 years, respectively.
- Data and Middle-Income Thresholds
- Defining Middle-Income Transitions
- Middle-Income Transitions Today
- Conclusions: What Are We to Make of the Term Middle-Income Trap?