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Growth Slowdowns and the Middle-Income Trap

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Author Info

  • Shekhar Aiyar
  • Romain A Duval
  • Damien Puy
  • Yiqun Wu
  • Longmei Zhang

Abstract

The “middle-income trap” is the phenomenon of hitherto rapidly growing economies stagnating at middle-income levels and failing to graduate into the ranks of high-income countries. In this study we examine the middle-income trap as a special case of growth slowdowns, which are identified as large sudden and sustained deviations from the growth path predicted by a basic conditional convergence framework. We then examine their determinants by means of probit regressions, looking into the role of institutions, demography, infrastructure, the macroeconomic environment, output structure and trade structure. Two variants of Bayesian Model Averaging are used as robustness checks. The results—including some that indeed speak to the special status of middle-income countries—are then used to derive policy implications, with a particular focus on Asian economies.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 13/71.

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Length: 64
Date of creation: 20 Mar 2013
Date of revision:
Handle: RePEc:imf:imfwpa:13/71

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Keywords: Economic growth; East Asia; Latin America; Developing countries; Cross country analysis; Economic models; slowdown; middle income trap; Bayesian Model Averaging; per capita income; export diversification; gdp per capita; trade openness; growth rates; trade structure; terms of trade; gdp growth; conditional convergence; regional trade; income convergence; trade integration; rate of growth; trade partners; oil exporters; gdp growth rates; factor endowments; oil importers; regional trade integration; income distribution; domestic shocks; world economy; expanded trade; technological change; trade shocks; general government consumption; idiosyncratic shocks; economic liberalization; transport costs; domestic investment; per capita income levels; trade liberalization; trade levels; external shocks; factor accumulation; terms of trade shocks; domestic firms; exporting countries; trade taxes; oil_importers; trade impact; oil_exporters; prudential regulation; trade barriers; export performance; balance of payments;

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  1. Le ralentissement de la croissance en Asie émergente est-il structurel ?
    by ? in D'un champ l'autre on 2014-02-11 12:33:00
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Cited by:
  1. Agenor, Pierre-Richard & Canuto, Otaviano, 2014. "Access to finance, product innovation and middle-income traps," Policy Research Working Paper Series 6767, The World Bank.
  2. Arvind Subramanian, 2013. "Preserving the Open Global Economic System: A Strategic Blueprint for China and the United States," Policy Briefs PB13-16, Peterson Institute for International Economics.
  3. Rahul Anand & Kevin C. Cheng & Sidra Rehman & Longmei Zhang, 2014. "Potential Growth in Emerging Asia," IMF Working Papers 14/02, International Monetary Fund.
  4. Georgy Idrisov & Sergey Sinelnikov-Murylev, 2014. "Forming Sources for a Long-run Growth: How to Understand Them?," Working Papers, Gaidar Institute for Economic Policy 0096, Gaidar Institute for Economic Policy, revised 2014.
  5. John C Bluedorn & Rupa Duttagupta & Jaime Guajardo & Nkunde Mwase, 2013. "The Growth Comeback in Developing Economies," IMF Working Papers 13/132, International Monetary Fund.
  6. Flaaen, Aaron & Ghani, Ejaz & Mishra, Saurabh, 2013. "How to avoid middle income traps ? evidence from Malaysia," Policy Research Working Paper Series 6427, The World Bank.
  7. Im, Fernando Gabriel & Rosenblatt, David, 2013. "Middle-income traps : a conceptual and empirical survey," Policy Research Working Paper Series 6594, The World Bank.
  8. Vivarelli, Marco, 2014. "Structural Change and Innovation as Exit Strategies from the Middle Income Trap," IZA Discussion Papers 8148, Institute for the Study of Labor (IZA).

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