Summary

More than 100 countries, including China, India, Brazil and South Africa, face serious obstacles that will prevent them fr om breaking out of the middle-income trap and joining the ranks of high-income countries in the coming decades, according to a new study by the World Bank (WB). The middle income trap is a term introduced by the WB in 2006. It refers to a situation wh ere a country reaches a certain level of socio-economic development and does not move forward. It is generally accepted that countries fall into the “trap” when they reach a welfare level of 10% of annual US GDP per capita – $8,000. According to WB estimates, in 2023, 108 countries were classified as middle-income countries, with annual GDP per capita ranging from $1,136 to $13,845. The authors developed a strategy to overcome economic stagnation and achieve high-income status. It includes three stages: • Stage 1 (for low-income countries). It is recommended to focus on measures to increase investment in infrastructure projects and human capital, attract external financing by reducing administrative barriers. • Stage 2 (for middle-income countries). It is recommended to expand the set of measures to increase investment with "injections" of foreign technologies, that is, their implementation and dissemination in various sectors of the economy. • Stage 3 (for countries with above-average income). It is recommended to combine investment, technological "injections" and innovation. At the innovation stage, countries no longer just borrow ideas, but also create new technological products. An example of the implementation of all three stages of the strategy is South Korea. In 1960, per capita income in this country was $ 1,200. By the end of 2023, this figure reached $ 33,000.