More Than 100 Countries Can Hardly Middle-Income Trap -- WB Report

(MENAFN- Kuwait News Agency (KUNA)) WASHINGTON, Aug 1 (KUNA) -- A new World Bank study shows that more than 100 countries, including China, India, Brazil, and South Africa, face serious obstacles that could hinder their efforts to become high-income countries in the next few decades.
The World Development Report 2024: The Middle Income Trap, released on Thursday, provides the first comprehensive roadmap to enable developing countries to escape the "middle-income trap."
Drawing on lessons of the past 50 years, the report finds that as countries grow wealthier, they usually hit a "trap" at about 10 percent of annual US GDP per person - the equivalent of USD 8,000 today.
That's in the middle of the range of what the World Bank classifies as "middle-income" countries.
Since 1990, only 34 middle-income economies have managed to shift to high-income status - and more than a third of them were either beneficiaries of integration into the European Union, or of previously undiscovered oil.
At the end of 2023, 108 countries were classified as middle-income, each with annual GDP per capita in the range of USD 1,136 to USD 13,845.
These countries are home to six billion people - 75 percent of the global population-and two out of every three people living in extreme poverty.
They generate more than 40 percent of global GDP and more than 60 percent of carbon emissions.
And they face far bigger challenges than their predecessors in escaping the middle-income trap: rapidly aging populations, rising protectionism in advanced economies, and the need to speed up the energy transition.
"The battle for global economic prosperity will largely be won or lost in middle-income countries," said Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics.
"But too many of these countries rely on outmoded strategies to become advanced economies," he noted.
"They depend just on investment for too long-or they switch prematurely to innovation.
"A fresh approach is needed: first focus on investment; then add an emphasis on infusion of new technologies from abroad; and, finally, adopt a three-pronged strategy that balances investment, infusion, and innovation.
"With growing demographic, ecological and geopolitical pressures, there is no room for error," Gill added. (end)
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