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The Middle-Income Trap: Myth or Reality?

Author

Listed:
  • Greg Larson
  • Norman Loayza
  • Michael Woolcock

Abstract

This note considers the most relevant literature and contends that, even if the ‘middle income trap’ is myth, it provides impetus for policy makers to reassess their strategies once the traditional sources of economic growth have diminished. Middle-income countries must find drivers of productivity, innovation, and competitiveness while strengthening the economic fundamentals that foster and stabilize growth. Reaching high-income levels is challenging, with a strong likelihood of growth slowdowns along the way. But stagnation is inevitable, and middle income countries must have patience to manage the transition responsibly, avoid pitfalls, and promote new opportunities.

Suggested Citation

  • Greg Larson & Norman Loayza & Michael Woolcock, 2016. "The Middle-Income Trap: Myth or Reality?," Research and Policy Briefs 104230, The World Bank.
    • Handle: RePEc:wbk:wbkrpb:104230
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    File URL: http://documents.worldbank.org/curated/en/965511468194956837/pdf/104230-REVISED-RPB-1-Middle-Income-Trap.pdf
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    Citations

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    Cited by:

    1. Prajapati, Vishwajeet Singh & Priya, Ashutosh & Pradhan, Vikas, 2023. "The middle-income trap – a problem of definition and empirical research," Economic and Regional Studies (Studia Ekonomiczne i Regionalne), John Paul II University of Applied Sciences in Biala Podlaska, vol. 16(3), September.
    2. Donatella Saccone & Mario Deaglio, 2020. "Poverty, emergence, boom and affluence: a new classification of economies," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(1), pages 267-306, April.
    3. Mayya Dubovik & Sergey Dmitriev & Natalya Obidovskaya, 2025. "A Structural Analysis of Eurasian Economic Union States’ Gross Domestic Product: A Conservation of a Middle-Income Trap," Public Organization Review, Springer, vol. 25(1), pages 271-294, March.
    4. Prajapati Vishwajeet Singh & Priya Ashutosh & Pradhan Vikas, 2023. "The middle-income trap – a problem of definition and empirical research," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 16(3), pages 459-472, September.
    5. Farok J. Contractor, 2022. "The world economy will need even more globalization in the post-pandemic 2021 decade," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(1), pages 156-171, February.

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