At the Threshold: The Increasing Relevance of the Middle-Income Trap

Patrick Imam () and Jonathan Temple

No 2024/091, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: Economic growth; aggregate development; middle-income trap; passage time; No. 24/91; Jonathan R.W. Temple; middle-income country; growth slowdown; Total factor productivity; Capital productivity; Human capital; Income; Global (search for similar items in EconPapers)
Pages: 45
Date: 2024-04-26
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Working Paper: At the Threshold: The Increasing Relevance of the Middle-Income Trap (2024)
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