## Growth Slowdowns and the Middle-Income Trap

_IMF Working Papers, March 20, 2013_

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**Canonical URL:** [Growth Slowdowns and the Middle-Income Trap](https://www.imf.org/en/publications/wp/issues/2016/12/31/growth-slowdowns-and-the-middle-income-trap-40411)

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## Bibliographic details
- Authors: Shekhar Aiyar, Romain A Duval, Damien Puy, Yiqun Wu, Longmei Zhang
- Published: March 20, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484330647.001

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### Overview
- Definition: 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.
- Research focus: The study examines the middle-income trap as a special case of growth slowdowns, defined as large sudden and sustained deviations from the growth path predicted by a basic conditional convergence framework.
- Authors: Shekhar Aiyar, Romain A Duval, Damien Puy, Yiqun Wu, Longmei Zhang
- Date: March 20, 2013
- Pages: 64

### Methodology
- Identification of slowdowns:
  - Growth slowdowns are identified as large sudden and sustained deviations from the growth path predicted by a basic conditional convergence framework.
- Determinants analysis:
  - Probit regressions are used to examine determinants, focusing on:
    - Institutions
    - Demography
    - Infrastructure
    - The macroeconomic environment
    - Output structure
    - Trade structure
- Robustness checks:
  - Two variants of Bayesian Model Averaging are used as robustness checks.

### Key empirical findings (as summarized)
- Some results indicate a special status of middle-income countries with respect to growth slowdowns and the middle-income trap.
- Determinants highlighted in the analysis include institutional quality, demographic factors (including fertility rate), infrastructure and public investment, macroeconomic environment, and structural features of output and trade.

### Policy implications (with particular focus on Asian economies)
- The results are used to derive policy implications for avoiding or overcoming growth slowdowns and the middle-income trap, with a particular focus on Asian economies.
- Policy-relevant themes emphasized by the study include:
  - Strengthening institutions
  - Addressing demographic challenges (e.g., fertility rate considerations)
  - Investing in infrastructure and public investment and public-private partnerships (PPP)
  - Maintaining a supportive macroeconomic environment
  - Managing output structure and trade structure to sustain growth

### Subject areas and keywords (as provided)
- Subjects: 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

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/growth-slowdowns-and-the-middle-income-trap-40411_