Evidence of Turkey Falling into the Middle Income Trap (Article)

There are now two distinct bodies of study that explain why middle-income nations fall behind high-income countries using political and economic characteristics. It is generally accepted that it is difficult to distinguish between these two categories of literature, even if both produce results that should be treated seriously. Nonetheless, this analysis suggests that MIT’s Convergence Hypothesis—one of the main outcomes of the Neo-Classical development model—is not actually achieved in reality, based on the literature that contains economic data. As a departure from the Convergence Hypothesis, an attempt was made to identify the similarities in the economic reasons of MIT through a survey of the literature. Research indicates that the financial and economic liberalisation processes brought forth by globalisation have negative effects on middle-income nations. This study attempts to identify the types of causal interactions that contribute to the Turkish economy’s middle-income trap by reviewing relevant literature. With technological developments, differences between countries are deepening. The results of this study showed that the Turkish economy was stuck in the Middle Income Trap because of insufficient capital and was unable to boost the level of national income above a particular threshold. However, this analysis also suggests that technological advancements, alongside strategic capital allocation, could potentially offer a pathway for middle-income nations to overcome the middle-income trap. The study highlights the need for further research into how middle-income nations can leverage technological developments and optimise capital allocation to achieve economic convergence with high-income countries.