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
-
India-Sweden Strategic Compass, Vol.3, No.1, January-February 2024
How are India and Sweden positioning themselves in the year 2024? The year 2024 is historic in terms of elections being held throughout the world. About half of the world’s […]
-
Must Regulate the AI Trifecta: Security, Business, and Privacy
The enormous amount of research and development in Artificial Intelligence (AI) technologies has led it to grow to a level that impacts security, business, and privacy concerns. The proliferation of […]
-
The Quad and Submarine Cable Protection in the Indo-Pacific: Policy Recommendations
This policy brief analyzes the Quadrilateral Security Dialogue (Quad) initiative on submarine cables in the Indo-Pacific and offers a timely roadmap as to how best to protect them. It first […]
-
Abandoning Neutrality, Absorbing Multipolarity: India and Sweden by 2047
Pragmatism and polarised positioning have become the new normal in foreign policy decision making – and Sweden and India are no exception. Sweden moved away from and perhaps permanently abandoned […]
-
India-Middle East-Europe Economic Corridor: Will It Get Subsumed by Its Grand Vision?
The recently concluded Group of Twenty (G20) Summit in New Delhi under India’s presidency was, undoubtedly, a crowning moment for India. From providing the G20 with new relevance among the […]