The Path to Overcoming the Middle‐Income Trap

Yang Song, Dayu Liu, Yadong Song and Bin Xu

Review of Development Economics, 2025, vol. 29, issue 4, 2747-2760

Abstract: An interesting question is whether middle‐income nations and areas will be stuck in the middle‐income trap inevitably? If the answer is positive, how to overcome such trap? To shed light on this question, we introduce a nonlinear time‐varying factor model to conduct a convergence test for 136 nations and areas classified into three convergence clubs during 1980–2024. We further investigate the upgrade process of total factor productivity (TFP). We find the middle‐income trap to be an unstable state in the long run. Transitional convergence of middle‐income nations and areas and convergence club formation are conditional. TFP plays a key role in forming convergence clubs. While technology introduction and imitation and technology spillover contribute to the upgrade process of TFP, medium‐income nations and areas aiming to transition to high‐income levels must pay close attention to the indispensable effect of independent innovation on the upgrade process of TFP, which provides a solid foundation for overcoming the middle‐income trap.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/rode.13249

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:rdevec:v:29:y:2025:i:4:p:2747-2760

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1363-6669

Access Statistics for this article

Review of Development Economics is currently edited by E. Kwan Choi

More articles in Review of Development Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().