Growth Slowdowns and Stagnation in the Middle: The Middle-Income Trap Revisited

This study first reframes the "middle-income trap" paradigm as the incidence of growth slowdowns and stagnation in the middle. This is followed by an analysis of its determinants using a cross-country panel data covering sixty-five middle-income countries between 1997 and 2017. The finding...

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Bibliographic Details
Published in:Journal of Southeast Asian economies 2021-04, Vol.38 (1)
Main Author: Ekanayake, Raveen
Format: Article
Language:English
Subjects:
Analysis
Economic growth
Online Access:Get full text
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Summary:This study first reframes the "middle-income trap" paradigm as the incidence of growth slowdowns and stagnation in the middle. This is followed by an analysis of its determinants using a cross-country panel data covering sixty-five middle-income countries between 1997 and 2017. The findings suggest that, as economies approach the "Lewis turning point", low value-added labour-intensive economic activities become less and less competitive, setting the stage for moving into a skill- and capital-intensive growth phase. To successfully navigate the middle-income transition, countries must look beyond capital accumulation, invest in developing human capital capabilities to sustain international competitiveness in the face of rising wage pressures, and induce structural change in favour of high value-added economic activities.
ISSN:2339-5095
2339-5206
DOI:10.1355/ae38-le