At the Threshold: The Increasing Relevance of the Middle-Income Trap
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Summary:
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.
Series:
Working Paper No. 2024/091
Subject:
Capital productivity Human capital Income Labor National accounts Production Total factor productivity
Frequency:
regular
English
Publication Date:
April 26, 2024
ISBN/ISSN:
9798400274855/1018-5941
Stock No:
WPIEA2024091
Format:
Paper
Pages:
45
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