Re-examining the Middle Income Trap Hypothesis: What to Reject and What to Revive?

Shang-Jin Wei and Xuehui Han

No 10989, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Do middle-income countries face difficult challenges producing consistent growth? Using transition matrix analysis, we can easily reject any unconditional notion of a ?middle-income trap? in the data. However, countries have different fundamentals and policies. Using a non-parametric classification technique, we search for variables that separate fast- and slow-growing countries. For middle-income countries, a relatively large working age population, sex ratio imbalance, macroeconomic stability, and financial development appear to be the key discriminatory variables. We do the same exercise for low-income countries. This framework yields conditions under which countries in the low- and middle-income ranges are trapped or even move backward.

Keywords: Low-income trap; Regression tree; Middle-income trap; Sex ratio imbalance (search for similar items in EconPapers)
JEL-codes: C14 C30 F01 O11 O43 (search for similar items in EconPapers)
Date: 2015-12
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Citations: View citations in EconPapers (18)

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Working Paper: Re-examining the Middle-Income Trap Hypothesis: What to Reject and What to Revive? (2015)
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