Han, Xuehui, Wei, Shang-Jin, (2015), “Re-examining the Middle Income Trap Hypothesis: What to Reject and What to Revive?”, Centre for Economic Policy Research, December.
Do middle-income countries face difficult challenges producing consistent growth? Using transition matrix analysis, we can easily reject any unconditional notion of a “middle-income trap” in the data. However, countries have different fundamentals and policies. Using a non-parametric classification technique, we search for variables that separate fast- and slow-growing countries. For middle-income countries, a relatively large working age population, sex ratio imbalance, macroeconomic stability, and financial development appear to be the key discriminatory variables. We do the same exercise for low-income countries. This framework yields conditions under which countries in the low- and middle-income ranges are trapped or even move backward.
Relevant Posts
- Velasco, Andres, (2015), “Greece, Argentina, and the Middle-Income Trap”, Project-syndicate, 30 May.
- Dabla-Norris, Era, Kochhar, Kalpana, Suphaphiphat, Nujin, Ricka, Frantisek, Tsounta, Evridiki, (2015),“Causes and Consequences of Income Inequality : A Global Perspective”, IMF Publications, 15 June.