Growth Slowdowns and the Middle-Income Trap

Shekhar Aiyar, Romain Duval, Damien Puy, Yiqun Wu and Longmei Zhang

No 2013/071, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; economic growth; per capita income; simple average; growth; slowdown; middle income trap; Bayesian Model Averaging; rate of growth; physical capital; time series; relative frequency; middle-income economy; fertility rate; Income; Capital inflows; Public investment and public-private partnerships (PPP); Infrastructure; Regional integration; East Asia; Asia and Pacific (search for similar items in EconPapers)
Pages: 64
Date: 2013-03-20
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Citations: View citations in EconPapers (125)

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Journal Article: Growth slowdowns and the middle-income trap (2018)
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