• Login
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
  • Home
  • News
    • General
    • Political
  • Economy
  • Business
    • Agribusiness
    • Aviation
    • Banking & Finance
    • Energy
    • Insurance
    • Manufacturing
    • Markets
    • Maritime
    • Real Estate
    • Tourism
    • Transport
  • Technology
    • Telecom
    • Cyber-security
    • Cryptocurrency
    • Tech-guide
    • Social Media
  • Features
    • Interviews
    • Opinions
  • Reports
    • Banking/Finance
    • Insurance
    • Budgets
    • GDP
    • Inflation
    • Central Bank
    • Sec/Gse
  • Lifestyle
    • Sports
    • Entertainment
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video
No Result
View All Result
No Result
View All Result
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
No Result
View All Result
Home Business Energy

The ‘Middle-Income Trap’ is Holding Back Over 100 Countries

11 months ago
in Energy, Features, highlights, Home, home-news, latest News
3 min read
0 0
0
79
VIEWS
Share on FacebookShare on TwitterShare on Linkedin

RelatedPosts

Bright Simons Questions Policy Rationale Behind Communications Minister’s Demand for 30% DSTV Price Cut

Public Transport Fares to Rise by 20% From August 8 

Shipping Giant, Maersk ends Direct US Trade Route to Africa’s Largest Economy

The ‘Middle-Income Trap’ is Holding Back Over 100 Countries

In 2007, a World Bank report coined the concept of the “middle-income trap.” At the time, the term was used to describe countries mostly in Latin America and the Middle East who, despite economic growth and falling poverty rates, were never able to become high-income countries.

Today, the “middle-income trap” continues to burden over 100 countries around the world, according to the World Bank’s 2024 World Development Report. But what exactly is the “middle-income trap”?

And, more importantly, how can countries overcome it — or avoid the trap altogether?

‘Superficial measures of economic efficiency’

At the end of 2023, the World Bank classified middle-income countries as economies who have a gross national income (GNI) per capita ranging from $1,136 to $13,845. Within the grouping, countries can further be classified as lower-middle-income countries (GNI per capita of $1,136 to $4,465) and upper-middle-income countries (GNI per capita of $4,466 to $13,845).

Today, roughly 75% of the global population live in middle-income countries, including an estimated 66% of people who live in extreme poverty, according to the World Bank report. Middle-income countries, the report adds, are responsible for 40% global economic output.

Image: World Economic Forum via Flourish

Currently, there are 108 countries — including major economies like China, Brazil, Türkiye and India — stuck in the “middle-income trap”, according to the World Bank.

The World Bank’s report describes the “middle-income trap” as a situation where middle-income countries face serious headwinds related to economic growth, wage competition and innovation, and often rely on “policies predicated on superficial measures of economic efficiency.” The circumstances, the report adds, make middle-income countries “especially prone to premature slowdowns in development.”

In a separate report, the International Monetary Fund notes that countries that have been stuck in the “middle-income trap” in recent decades have found themselves “caught between the rapidly changing advanced technology of rich countries, and competition in mature products from poor countries with low wages.”

The World Bank maintains that growth prospects for middle-income countries depend on their ability to increase production through innovation — a difficult feat for many economies to achieve at scale. The organization’s report adds that for many middle-income countries, achieving high-income status could take multiple generations if current economic growth rates hold.

“Most middle-income countries remain wedded to an approach out of the last century: policies focused heavily on attracting investment,” Indermit Gill, the World Bank’s Chief Economist and a member of the World Economic Forum’s Chief Economists community, told the Forum. “That’s the equivalent of driving a car entirely in first gear: it will take forever to get to the destination.”

Escaping the trap

In recent decades, only a few dozen countries have grown from middle-income countries into high-income countries. This includes Saudi Arabia, Latvia, Bulgaria and South Korea, among others.

In its report, the World Bank outlines a three-pronged approach that countries can follow to avoid the “middle-income trap”. The plan — dubbed the 3i strategy — entails a strategic calibration of economic policies related to investment, infusion and innovation.

First, low-income countries should focus primarily on increasing investment in the economy. In 2001, for example, Colombia was able to increase investment in the country by implementing various reforms that included limiting government spending, introducing a floating exchange rate and boosting central bank independence.

Once a country has reached lower-middle-income status, policies should be adjusted to facilitate a mix of investment and infusion. In particular, infusion should be focused on expanding the use of advanced technologies.

Then, after reaching upper-middle-income status, countries should complement investment and infusion with innovation. The addition of innovation, the report notes, requires “restructuring enterprise, work, and energy use once again, with an even greater emphasis on economic freedom, social mobility, and political contestability.”

Accept our marketing cookies to access this content.

These cookies are currently disabled in your browser.

The World Bank’s report lauds South Korea as an example of a country that has effectively implemented the 3i strategy.

In the 1970s and 1980s, South Korea pursued reforms to encourage private investments and industrial policies that boosted technology use and production efficiency. Subsequent economic growth was staggering; South Korea’s per capita income rose from $1,200 in 1960 to $33,000 in 2023, according to the World Bank.

In a statement to the Forum, Gill added that in order to attain high-income status, governments in middle-income countries “must enact competition policies that create a healthy balance between” companies ranging from large corporations to startups.

“The benefits will be greatest when policymakers focus less on the size of the company and more on the value it brings to the economy, and when they encourage the upward mobility of all of their citizens instead of fixating on zero-sum policies to reduce income inequality,” Gill stated.

‘Far heavier burden’

Experts note that achieving sustained economic development across middle- and low-income countries is not an easy task — especially given the economic uncertainties that continue to burden the global economy.

“Middle-income countries now face far heavier burdens than their predecessors did: ageing populations, geopolitical and trade frictions, and the need to speed up growth without fouling the environment,” Gill stated.

Nonetheless, by outlining a new formula for facilitating economic growth, the World Bank’s 2024 World Development Report says it aims to make the “expression ‘middle-income trap’ completely obsolete.”

Tags: Middle-Income TrapThe 'Middle-Income Trap' is Holding Back Over 100 Countries

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms & Conditions and Privacy Policy.

No Result
View All Result

Highlights

Africa’s Biggest Stock Exchange Considers Extending Trading to 24 Hours

Lewis Hamilton’s Future at Ferrari in Question After Tough Hungarian GP

Transfer DealSheet: Latest on Benjamin Sesko, Nicolas Jackson and More

Gov’t Targets 650,000 Tonnes of Cocoa Production for 2025/26 Crop Season, Eyes 1 Million Tonne Output in the Long-term 

Shoprite to Exit Ghana and Malawi Sharpening Focus on Core South African Market

Gold Fields Forecasts Total Gold Production of 2.4 Million Ounces for 2025

Trending

Features

Bright Simons Questions Policy Rationale Behind Communications Minister’s Demand for 30% DSTV Price Cut

August 5, 2025

Bright Simons Questions Policy Rationale Behind Communications Minister’s Demand for 30% DSTV Price Cut Renowned public policy...

Public Transport Fares to Rise by 20% From August 8 

August 5, 2025

Shipping Giant, Maersk ends Direct US Trade Route to Africa’s Largest Economy

August 5, 2025

Africa’s Biggest Stock Exchange Considers Extending Trading to 24 Hours

August 5, 2025

Lewis Hamilton’s Future at Ferrari in Question After Tough Hungarian GP

August 5, 2025

Who we are?

NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World

NorvanReports is a unique data, business, and financial portal aimed at providing accurate, impartial reporting of business news on Ghana, Africa, and around the world from a truly independent reporting and analysis point of view.

© 2020 Norvanreports – credible news platform.
L: Hse #4 3rd Okle Link, Baatsonaa – Accra-Ghana T:+233-(0)26 451 1013 E: news@norvanreports.com info@norvanreports.com
All rights reserved we display professionalism at all stages of publications

No Result
View All Result
  • Home
  • Business
    • Agribusiness
    • Aviation
    • Energy
    • Insurance
    • Manufacturing
    • Real Estate
    • Maritime
    • Tourism
    • Transport
    • Banking & Finance
    • Trade
    • Markets
  • Economy
  • Reports
  • Technology
    • Cryptocurrency
    • Cyber-security
    • Social Media
    • Tech-guide
    • Telecom
  • Features
    • Interviews
    • Opinions
  • Lifestyle
    • Entertainment
    • Sports
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
NORVANREPORTS.COM | Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.