At the Threshold: The Increasing Relevance of the Middle-Income Trap

At the Threshold: The Increasing Relevance of the Middle-Income Trap
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Volume/Issue: Volume 2024 Issue 091
Publication date: April 2024
ISBN: 9798400274855
$20.00
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Labor , Economics- Macroeconomics , Economics / General , Economic growth , aggregate development , middle-income trap , passage time , No , 24/91 , Jonathan R , W , Temple , middle-income country , growth slowdown , Total factor productivity , Capital productivity , Human capital , Income , Global

Summary

We investigate the existence of a middle-income trap using finite state Markov chains, constant growth thresholds, and mean passage times. As well as studying output per head, we examine the dynamics of its proximate determinants: TFP, the capital-output ratio, and human capital. We find upwards mobility for the capital-output ratio and human capital, but not for relative TFP. The lack of upwards mobility in relative TFP, at least from an intermediate level, suggests that escaping the middle-income category can take many years, and such traps may become increasingly apparent in the years to come.