mellaninkomstfälla

The middle-income trap is an economic phenomenon where a country experiences rapid growth and development, reaching middle-income status, but then struggles to transition to high-income status. This occurs because the country's competitive advantage, often based on low labor costs, erodes as wages rise. Without significant advancements in productivity, innovation, and higher value-added industries, the country can become stuck in a cycle of moderate growth, unable to compete with lower-cost developing nations nor with the advanced economies.

Several factors contribute to the middle-income trap. These can include insufficient investment in education and research and development, weak institutions, corruption, inadequate infrastructure, and a lack of diversification in the economy. Countries may struggle to move beyond manufacturing or resource-based industries and find it difficult to foster a knowledge-based economy or high-tech sectors. The challenge lies in shifting from imitation and adaptation to genuine innovation and creating more sophisticated products and services.

To escape the middle-income trap, countries typically need to implement structural reforms. These often involve increasing investment in human capital through better education and training, promoting technological innovation, improving governance and the business environment, and fostering competition. Diversifying the economy into higher-value sectors and moving up the global value chain are crucial steps. Ultimately, escaping the trap requires a strategic shift towards sustained productivity growth and a more advanced economic structure.