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    Middle-Income Trap: Review of the Conceptual Framework

    Pruchnik, Kamil; Zowczak, Jakub | July 2017
    Abstract
    The aim of this study is to develop a conceptual framework for the middle-income trap (MIT). Firstly, we present an extensive literature review of what the MIT concept is, why economies become ‘stuck’ in the MIT, and how the idea is criticized. Secondly, we put together a list of countries stuck in the MIT according to different definitions. We contribute to the literature by concluding that there are significant inconsistencies among the prevailing definitions of the MIT. In particular, 60.2% of all countries have been classified as stuck in the trap by at least one definition, as compared to 48.4% of all countries being currently classified as middle-income by the World Bank. Furthermore, at least 36.0% of all countries have been simultaneously classified as stuck in the trap by some definitions and as escapees by others. Thirdly, we propose a framework for assessing exposure to the MIT based on the following factors: i) unfavorable demographics, ii) low level of economic diversification, iii) inefficient financial market, iv) insufficiently advanced infrastructure, v) low level of innovation, vi) weak institutions, vii) inefficient labor market. Finally, as the analysis of the MIT definitions delivers mixed results, we introduce a new concept, the convergence trap.
    Citation
    Pruchnik, Kamil; Zowczak, Jakub. 2017. Middle-Income Trap: Review of the Conceptual Framework. © Asian Development Bank Institute. http://hdl.handle.net/11540/7174.
    Keywords
    Price stabilization
    Food prices
    Price policy
    Crisis
    Unemployment
    Economic cooperation
    Gross domestic product
    Employment
    Economic forecast
    Economic indicators
    Growth models
    Gross domestic product
    Macroeconomics
    Economic forecast
    Social condition
    Economic dependence
    Economic assistance
    Economic Crisis
    Economic Efficiency
    Economic Policies
    Regional Economic Development
    Job Evaluation
    Evaluation
    Macroeconomic
    Macroeconomic Analysis
    Performance Evaluation
    Impact Evaluation
    Economic Welfare
    Economic Incentives
    Open price system
    Price fixing
    Price regulation
    Consumer price indexes
    Financial crisis
    Labor economics
    Regional economics
    Turnover
    Economic survey
    Job analysis
    Labor turnover
    Exports
    Economic development projects
    Economic policy
    Economic forecasting
    Welfare economics
    Welfare state
    Poor
    Food relief
    Poverty
    Domestic economic assistance
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    Citable URI
    http://hdl.handle.net/11540/7174
    Metadata
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    Author
    Pruchnik, Kamil
    Zowczak, Jakub
    Theme
    Economics
    Evaluation
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise