It’s Democracy, Stupid: Reappraising the Middle-Income Trap
Claudia Rives Casanova
The causes and reasons for countries’ economic growth and development have long been a challenging subject for research and debate. It is observed that while many countries experience high growth when they are low-income countries, once they become middle-income countries rapid growth is often followed by economic stagnation, with the potential for increasing social unrest as a result. A key puzzle is therefore why many middle-income countries fail to sustain suf-ficient economic growth to become high-income countries. A relatively recent concept in this debate is that of the Middle Income Trap (MIT), which argues that countries encounter a series of obstacles when trying to adapt their econo-mies and comparative advantages to become more specialized market econo-mies. In other words, the very same factors that fueled growth in the early stag-es act as a hindrance at the middle-income level, slowing down and eventually causing a stagnation of the growth process, if the correct policies are not im-plemented. This study seeks to reappraise the MIT concept by going beyond a mainstream analysis, which focuses mainly on economic aspects of growth/stagnation. Accordingly, while prudent economic management and pol-icies are vital to avoid the MIT, factors relating to governance, institutions, in-clusive growth, and education, among others, can underlie and play a determin-ing role in explaining failure or success in sustaining economic growth. There-fore, non-economic dimensions are fundamental for any reform or structural change, and, as is argued in this paper, democratic governance can serve as a useful proxy for many of these factors.
Related Publications
-
What might 2023 bring for the security situation in Europe in view of the ongoing rivalry between the superpowers, the war in Ukraine and the economic crisis?
The ramifications of the era-defining year that was 2022 will continue to be felt in 2023 – from the return of war to Europe and its multifaceted aftermath (social, humanitarian, […]
-
Xi Jinping Thought: Xi’s Struggle Against Political Decline
Abstract One of the latest extensions of Xi Jinping’s influence on Chinese society is the incorporation of ‘Xi Thought’ into elementary and middle school curriculums. Like his predecessors, Xi is […]
-
Partners in a Post Covid-19 International Order? The EU-Japan Strategic Partnership Agreement (SPA)
In July 2018, Japan and the EU signed both the Economic Partnership Agreement (EPA) and the Strategic Partnership Agreement (SPA). The two agreements have been described as formally ushering in […]