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Technology adoption and the middle‐income trap: Lessons from the Middle East and East Asia

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  • Rabah Arezki
  • Rachel Yuting Fan
  • Ha Nguyen

Abstract

This paper documents the existence of a “middle‐income trap” for the Middle East and North Africa region and contrasts the evidence with that of the East Asia and Pacific region. The results are twofold. First, nonparametric regressions show that the average rate of economic growth in the Middle East and North Africa has not only been significantly lower than that in the East Asia and Pacific region, but has also tended to drop at an earlier level of income. Second, econometric results point to the Middle East and North Africa having experienced a relatively slow pace of technology adoption in general‐purpose technologies and that a slower adoption pace of technology is associated with significantly lower economic growth. The paper concludes that barriers to the adoption of general‐purpose technologies related to the lack of contestability in key sectors constitute an important channel of transmission for the middle‐income trap.

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  • Rabah Arezki & Rachel Yuting Fan & Ha Nguyen, 2021. "Technology adoption and the middle‐income trap: Lessons from the Middle East and East Asia," Review of Development Economics, Wiley Blackwell, vol. 25(3), pages 1711-1740, August.
    • Handle: RePEc:bla:rdevec:v:25:y:2021:i:3:p:1711-1740
    DOI: 10.1111/rode.12775
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    1. Rabah Arezki & Vianney Dequiedt & Rachel Yuting Fan & Carlo Maria Rossotto, 2021. "Liberalization, Technology Adoption, and Stock Returns: Evidence from Telecom," Working Papers hal-03174354, HAL.
    2. Rabah Arezki & Vianney Dequiedt & Rachel Yuting Fan & Carlo Maria Rossotto, 2021. "Working Paper 352 - Liberalization, Technology Adoption, and Stock Returns: Evidence from Telecom," Working Paper Series 2478, African Development Bank.
    3. Arezki,Rabah & Senbet,Lemma W., 2020. "Transforming Finance in the Middle East and North Africa," Policy Research Working Paper Series 9301, The World Bank.
    4. Sinha, Avik & Balsalobre-Lorente, Daniel & Zafar, Wasif & Saleem, Muhammad Mansoor, 2021. "Analyzing Global Inequality in Access to Energy: Developing Policy Framework by Inequality Decomposition," MPRA Paper 111061, University Library of Munich, Germany, revised 2021.
    5. Gnidchenko, Andrey A., 2021. "Structural transformation and quality ladders: Evidence from the new Theil's decomposition," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 281-291.

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