Growth Slowdowns Redux: New Evidence on the Middle-Income Trap
AbstractWe analyze the incidence and correlates of growth slowdowns in fast-growing middle-income countries, extending the analysis of an earlier paper (Eichengreen, Park and Shin 2012). We continue to find dispersion in the per capita income at which slowdowns occur. But in contrast to our earlier analysis which pointed to the existence of a single mode at which slowdowns occur in the neighborhood of $15,000-$16,000 2005 purchasing power parity dollars, new data point to two modes, one in the $10,000-$11,000 range and another at $15,000-$16,0000. A number of countries appear to have experienced two slowdowns, consistent with the existence of multiple modes. We conclude that high growth in middle-income countries may decelerate in steps rather than at a single point in time. This implies that a larger group of countries is at risk of a growth slowdown and that middle-income countries may find themselves slowing down at lower income levels than implied by our earlier estimates. We also find that slowdowns are less likely in countries where the population has a relatively high level of secondary and tertiary education and where high-technology products account for a relatively large share of exports, consistent with our earlier emphasis of the importance of moving up the technology ladder in order to avoid the middle-income trap.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18673.
Date of creation: Jan 2013
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Find related papers by JEL classification:
- E0 - Macroeconomics and Monetary Economics - - General
- F0 - International Economics - - General
- N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
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- Shekhar Aiyar & Romain A Duval & Damien Puy & Yiqun Wu & Longmei Zhang, 2013. "Growth Slowdowns and the Middle-Income Trap," IMF Working Papers 13/71, International Monetary Fund.
- Fatih Ozatay, 2013. "Likely Candidates: Next BRICs? Turkey," Working Papers, TOBB University of Economics and Technology, Department of Economics 1305, TOBB University of Economics and Technology, Department of Economics, revised Sep 2013.
- 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.
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