OTAVIANO CANUTO ON THE MIDDLE-INCOME TRAP
The “middle-income trap” has become a broad designation trying to capture the many cases of developing countries that succeeded in evolving from low- to middle-levels of per capita income, but then appeared to stall, losing momentum along the route toward the higher income levels of advanced economies. We need to approach middle-income countries as being in a complex transition phase between accumulation and innovation-based economies. Individual middle-income country experiences of falling into a “trap” may be approached as cases of lack of or failing performance in footing the bill in terms of appropriate policies and institutions.
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Well done my good friend Octavio. It’s a well articulated document, which has surfaced at the right time for the appropriate audience. Middle-Income Countries always suffer from its development because the multilateral system is very unfair. The multilateral is a two-edged sword cutting both sides.
It is argued that “there is no tendency for low-and middle-income countries to converge toward high-income countries”. Some of the arguments put forward to support this position are: institutional power imbalances, growth strategies followed in the past no longer suit existing circumstances, middle-income countries have lost their competitive edge in the export of manufactured goods because of rising wages, the inability of those countries to keep up with more advanced economies “in the high-valued-added market”, among others.
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