The Middle Income Trap
Definition
One phenomenon that the country succeeded in raising the level of poor countries to middle-income countries, but then could
not become a high-income country.
Causes of the middle-income trap
• Neglect the development of technology.
• Disregard for human resource development.
• The decline of resources and the environment.
• Economic, social and political instability.
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Neglect the developmen of technology.
Technology development is a factor that is vital to economic growth. Developing countries in modern times to take advantage of the technology is developed with the use of technologies such as the foreign companies to invest.
Disregard for human resource development.
In companies with investment from abroad. Working people can not accept the transfer of technology and knowledge from foreign experts. When the economy is expanding Nudge cost of living increase The workers have demanded a wage rise. The productivity of labor has increased as the increase in wages. The production costs are higher.
The decline of resources and the environment
The development of the low-income to middle-income levels in many countries. Arising from the use of natural resources available in abundance. Economic development to a higher growth rate. May result in the wasteful use of resources. Natural resources are completely earlier gradually diminish during the country is not rich. I do not care about pollution It gives priority to economic growth. Income generation and employment rates. Thus neglecting the conservation of resources and reduce pollution. But when the decline occurs, it can be hard to fix, and requires a large budget.
Economic, social and political instability.
Many developing countries have economic, social and political instability, the sequins are cutting the income. There is a conflict in society With the political changes quite often. There is no continuity in the economic and social development policies. Conflicts public groups May even cause unrest and violence in society. In some cases, up to the Civil War. In this condition, the trade, investment and economic exchange. You must be halted The economy of the country is difficult to develop further.
Future Outlook
The study ago There are few countries in the world, the country can emerge from the middle-income trap. Which is said to be very common, such as Japan, Korea and Taiwan. The country is caught in the middle-income trap that many countries in South America and most countries in Asia. If, however, does not specify how long the clear. Countries with low-income countries will be able to move into the middle-income countries have.
Future Outlook
As long as the rate of economic growth over the center.
But the country is growing slowly. It may take decades to be able to step into a high-income country. It is said that One of the countries that are successful in transitioning from middle income to high-income countries there. Must be a country that can move up from middle-income to higher income in the period that no longer an example of the middle-income level countries with high income may only take 10-15 years for the country. Others are growing, but can not move up the income is income that lasts for decades. It is a country caught in the middle-income trap.