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Growth Convergence and the Middle-Income Trap

Author

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  • Takatoshi Ito

    (School of International and Public Policy, Columbia University)

Abstract

Emerging market economies in East Asia have followed a similar growth path (growth convergence) from a low-income, high-growth state to a middle-income, middle-growth state through industrialization. The economic development of Japan was followed by the “four tigers” (Hong Kong, China; the Republic of Korea; Singapore; and Taipei,China) in the 1970s; and subsequently by members of the Association of Southeast Asian Nations in the 1980s and the People's Republic of China in the 1990s and 2000s. The growth rates of Asian economies are slowing over time and may fall to advanced economy levels before incomes fully catch up with the advanced economies. This is defined as the middle-income trap in the paper. This paper proposes that there exist three convergence paths in Asia: low income, middle income, and high income. Economies need to shift from one convergence path to a higher one by implementing economic and political reforms that can generate innovation. Without reform, economies may fall into a low- or middle-income trap.

Suggested Citation

  • Takatoshi Ito, 2017. "Growth Convergence and the Middle-Income Trap," Asian Development Review, MIT Press, vol. 34(1), pages 1-27, March.
    • Handle: RePEc:tpr:adbadr:v:34:y:2017:i:1:p:1-27
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/ADEV_a_00079
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Cruel Arithmetic of Income Convergence in East Asia
      by djgreen2009@gmail.com (David Jay Green) in Asia Economics Blog on 2022-10-26 11:46:51

    Citations

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    Cited by:

    1. Cyn‐Young Park & Rogelio V. Mercado, 2020. "Economic Convergence, Capital Accumulation, and Income Traps: Empirical Evidence," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(1), pages 26-58, March.
    2. Wagner, Helmut, 2018. "Structural change, rebalancing, and the danger of a middle-income trap in China," BOFIT Policy Briefs 6/2018, Bank of Finland Institute for Emerging Economies (BOFIT).
    3. Takatoshi Ito, 2018. "Changing International Financial Architecture: Growing Chinese Influence?," Asian Economic Policy Review, Japan Center for Economic Research, vol. 13(2), pages 192-214, July.
    4. Wagner, Helmut, 2018. "Structural change, rebalancing, and the danger of a middle-income trap in China," CEAMeS Discussion Paper Series 13/2018, University of Hagen, Center for East Asia Macro-economic Studies (CEAMeS).
    5. Amir Lebdioui & Keun Lee & Carlo Pietrobelli, 2021. "Local-foreign technology interface, resource-based development, and industrial policy: how Chile and Malaysia are escaping the middle-income trap," The Journal of Technology Transfer, Springer, vol. 46(3), pages 660-685, June.
    6. Alexandrov Nevski Sachs Semanou & Kamil Uslu, 2019. "Comparative Analysis of Growth Convergence in Selected West African Countries," Business and Economic Research, Macrothink Institute, vol. 9(3), pages 87-101, September.
    7. Prakarti Sharma & Nidhi Sharma, 2022. "An Examination of Per Capita Income Convergence in Emerging Market Economies," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 14(3), pages 319-347, September.
    8. Wiktor Błoch, 2021. "Determinants of the threat of the middle-income trap," Bank i Kredyt, Narodowy Bank Polski, vol. 52(4), pages 339-356.

    More about this item

    Keywords

    Asian financial crisis; global financial crisis; growth convergence; middle-income trap;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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