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Which countries have escaped the middle-income trap?


EuropeVersion Over the past half-century, many promising economies have been mired in middle-income mediocrity. To help its largest client avoid this fate, the World Bank released a flagship report called “China 2030” a decade ago. The publication warns that the “middle-income trap” is a term used to describe the phenomenon. “Of the 101 middle-income economies in 1960, only 13 were high-income economies by 2008,” it claims. This astonishing statistic is illustrated with a chart similar to the one below. Ten years later, how has the situation changed?

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Answering this question depends on the definition of employment median income.According to the official classification of the World Bank, a country can only be gross domestic product That’s over $13,200 or so per person. By this measure, China looks set to escape the middle-income trap within a year or two.But for the purposes of the “China 2030” chart, the World Bank uses a stricter definition: a middle-income country has a gross domestic product In purchasing power parity terms, per capita income is about 5% to 43% of that in the United States.

‘China 2030’ chart draws on history gross domestic product Statistics compiled by economist Angus Maddison. His colleagues and successors have since revised and updated the estimates through 2018. We update further to 2022 using data from our sister organisation, the Economist Intelligence Unit.

As a result, 23 countries that were middle-income in 1960 now qualify as high-income—more progress than one might have expected in the past difficult decade.Graduates include three Gulf countries (Bahrain, Oman and Saudi Arabia) and 6 members European Union (Croatia, Cyprus, Hungary, Malta, Poland and Slovenia). Malaysia has joined the ranks of the high-income Asian Tigers. The African outer island nation of Seychelles has also crossed the threshold. Unfortunately, two other countries in the region, Equatorial Guinea and Mauritius, which were considered high-income countries in 2008, have moved in the opposite direction.

The list can actually be expanded further. The seven countries currently classified as high-income by the definition of China 2030 did not exist as sovereign states in 1960 and therefore do not appear on the chart. These include the Czech Republic and the Slovak Republic, as well as several former Soviet states: Estonia, Kazakhstan, Lithuania, Latvia and Turkmenistan.

Russia, the country that once dominated them, is also moving from a middle-income country in 1960 to a high-income country in 2022, and its economy has withstood Putin’s war better than expected.However it’s gross domestic product Per capita income is likely to fall below the high-income threshold this year. A Russian reformer once quipped that his country had been stuck in the middle-income trap for two centuries. Mr Putin is doing his best to bring it back to that state.

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