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Growth Slowdowns And Middle-Income Trap: Evidence From New Unit Root Framework

Author

Listed:
  • FUMITAKA FURUOKA

    (Asia–Europe Institute, University of Malaya, Malaysia)

  • KIEW LING PUI

    (Department of Economics, Faculty of Economics and Administration, University of Malaya, Malaysia)

  • CHINYERE EZEOKE

    (Faculty of Law, University of Malaya, Malaysia)

  • RAY I. JACOB

    (Africa-Asia Development University Network, University of Malaya, Malaysia)

  • OLAOLUWA S. YAYA

    (Economic and Financial Statistics Unit, Department of Statistics, University of Ibadan, Nigeria)

Abstract

This paper suggests a new testing procedure to systematically examine the middle-income trap (MIT). To empirically demonstrate this procedure, one high income and 14 middle-income countries are examined using newly developed unit root tests — Fourier ADF with structural break (FADF-SB) and Seemingly Unrelated Regressions Fourier ADF (SUR-FADF). The FADF-SB test incorporates unknown nonlinearity and smooth break in the time-series, while the SUR-FADF test accounts for cross-sectional dependency. The empirical findings produced mixed results: 10 countries have a relatively high possibility of facing the MIT problem, while only one country has a relatively low possibility of facing the problem. For the remaining three countries, it is uncertain whether they will face the problem of MIT. These empirical findings have significant policy implications.

Suggested Citation

  • Fumitaka Furuoka & Kiew Ling Pui & Chinyere Ezeoke & Ray I. Jacob & Olaoluwa S. Yaya, 2024. "Growth Slowdowns And Middle-Income Trap: Evidence From New Unit Root Framework," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 69(01), pages 461-477, March.
    • Handle: RePEc:wsi:serxxx:v:69:y:2024:i:01:n:s0217590820500083
    DOI: 10.1142/S0217590820500083
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    More about this item

    Keywords

    Cross-sectional dependency; Fourier approximation; income convergence; middle-income trap; structural break; unit root;
    All these keywords.

    JEL classification:

    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania

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