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At the Threshold: The Increasing Relevance of the Middle-Income Trap

Author

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  • Patrick A. Imam
  • Jonathan R. W. Temple

Abstract

We investigate the existence of a middle-income trap using finite state Markov chains, constant growth thresholds, and mean passage times. As well as studying output per head, we examine the dynamics of its proximate determinants: TFP, the capital-output ratio, and human capital. We find upwards mobility for the capital-output ratio and human capital, but not for relative TFP. The lack of upwards mobility in relative TFP, at least from an intermediate level, suggests that escaping the middle-income category can take many years, and such traps may become increasingly apparent in the years to come.

Suggested Citation

  • Patrick A. Imam & Jonathan R. W. Temple, 2024. "At the Threshold: The Increasing Relevance of the Middle-Income Trap," IMF Working Papers 2024/091, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2024/091
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