What is the Middle-Income Trap Crisis ?

Many economists believe that countries that grow from low-income to middle-income levels tend to get stuck in a trap that prevents them from moving towards high-income status.


Middle-income trap

  1. The World Bank defines a middle-income country as one with a gross national income (GNI) per capita of $1,000-12,000 in 2011 prices.
  2. The middle-income trap refers to the phenomenon where rapidly growing economies reach the middle-income tier but then stagnate.
  3. World Bank Defines The middle-income trap as a development stage that characterizes countries that are squeezed between low-wage producers and highly skilled and fast-moving innovators for a variety of reasons—especially a failure to build institutional, human and technological capital.