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Growth or Development Trap

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  • Magdolna Csath

    (Pazmany Peter Catholic University, University of Public Service)

Abstract

In this essay, we explore how to obtain a more accurate picture not only of the growth situation as measured by traditional economic indicators, but also of the level of development, which also raises the possibility of becoming trapped. We distinguish between development and growth, pointing out that Hungary has good growth figures, but lags behind in terms of development indicators. This discrepancy requires further, more detailed analysis in order to define desirable targets for development indicators that are independent of growth indicators, and to avoid the development trap by achieving them. This is also justified because, in the longer term, the evolution of development indicators also affects the chances of sustainable growth and allows for more general, systemic qualitative progress. Based on the statistical data presented in relation to the issues raised, we conclude that it would be necessary to construct a mathematical model of growth and development to illustrate and econometrically analyse the dynamic relationship. But this is not undertaken in the context of this essay.

Suggested Citation

  • Magdolna Csath, 2022. "Growth or Development Trap," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 21(2), pages 152-174.
    • Handle: RePEc:mnb:finrev:v:21:y:2022:i:2:p:152-174
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    References listed on IDEAS

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    1. Fernando Gabriel Im & David Rosenblatt, 2015. "Middle-Income Traps: A Conceptual and Empirical Survey," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 6(03), pages 1-39.
    2. Barry Eichengreen & Donghyun Park & Kwanho Shin, 2013. "Growth Slowdowns Redux: New Evidence on the Middle-Income Trap," NBER Working Papers 18673, National Bureau of Economic Research, Inc.
    3. Csath, Magdolna, 2019. "Middle-Income Trap or Development Trap and its Budgetary Effects," Public Finance Quarterly, Corvinus University of Budapest, vol. 64(1), pages 30-50.
    4. György Matolcsy & Dániel Palotai, 2019. "Hungary Is on the Path to Convergence," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 18(3), pages 5-28.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    middle-income trap; middle development trap; resilience; adaptability; intangible investment; growth models;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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