Growth Slowdowns and the Middle-Income Trap

By Shekhar Aiyar, Romain A Duval, Damien Puy, Yiqun Wu, Longmei Zhang

March 20, 2013

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Shekhar Aiyar, Romain A Duval, Damien Puy, Yiqun Wu, and Longmei Zhang. Growth Slowdowns and the Middle-Income Trap, (USA: International Monetary Fund, 2013) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The “middle-income trap” is the phenomenon of hitherto rapidly growing economies stagnating at middle-income levels and failing to graduate into the ranks of high-income countries. In this study we examine the middle-income trap as a special case of growth slowdowns, which are identified as large sudden and sustained deviations from the growth path predicted by a basic conditional convergence framework. We then examine their determinants by means of probit regressions, looking into the role of institutions, demography, infrastructure, the macroeconomic environment, output structure and trade structure. Two variants of Bayesian Model Averaging are used as robustness checks. The results—including some that indeed speak to the special status of middle-income countries—are then used to derive policy implications, with a particular focus on Asian economies.

Subject: Balance of payments, Capital inflows, Economic integration, Expenditure, Income, Infrastructure, National accounts, Public investment and public-private partnerships (PPP), Regional integration

Keywords: Asia and Pacific, Bayesian Model Averaging, Capital inflows, East Asia, Economic growth, Fertility rate, Growth, Income, Infrastructure, Middle income trap, Middle-income economy, Per capita income, Physical capital, Public investment and public-private partnerships (PPP), Rate of growth, Regional integration, Relative frequency, Simple average, Slowdown, Time series, WP

Publication Details

Pages:

64
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2013/071
Stock No:

WPIEA2013071
ISBN:

9781484330647
ISSN:

1018-5941

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