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Over the last two decades, a growing body of literature dealing with the phenomenon of the “middle-income trap” (MIT) has emerged. The term MIT usually refers to countries that have experienced rapid growth and thus reached the status of a middle-income country in a very short period of time, but have not been able to further catch up with the group of high-income economies. As wages rise, countries gradually lose their advantage in low-cost manufacturing, while opportunities for productivity gains through imitation and structural transformation diminish. At the same time, they may not yet have developed the innovation capacity needed to compete with advanced economies, leaving them caught between low-cost producers and innovation-driven high-income economies.
Several of my past and current research projects focus on the middle-income trap. Below is a selection of related publications.
Literature survey on the middle-income trap
Glawe, L. and Wagner, H. (2016): The Middle-Income Trap - Definitions, Theories and Countries Concerned: A Literature Survey. Comparative Economic Studies 58(4): 507-538. doi: https://doi.org/10.1057/s41294-016-0014-0.
Case study on the middle-income trap in China
Glawe, L. and Wagner, H. (2020): China in the Middle-Income Trap? China Economic Review 60, 101264: 1-25. doi: https://doi.org/10.1016/j.chieco.2019.01.003.
The role of automation and AI in the middle-income trap mechanism
Glawe, L. and Wagner, H. (2020): The Middle-Income Trap 2.0: The Increasing Role of Human Capital in the Age of Automation and Implications for Developing Asia. Asian Economic Papers 19(3): 40-58. doi: https://doi.org/10.1162/asep_a_00783
Human capital and institutional traps in China
Glawe, L. and Wagner, H. (2023): The 'Double Trap' in China - Multiple Equilibria in Institutions and Income and Their Causal Relationship. Open Economies Review. doi: https://doi.org/10.1007/s11079-022-09693-3
Glawe, L. and Wagner, H. (2023): New Evidence on the Human Capital Dynamics within China: Is There a Human Capital Trap? Singapore Economic Review. doi: https://doi.org/10.1142/S0217590823500145
The figure shows one example of a so-called relative middle-income trap definition, where a country is considered to be in a middle-income trap if its income remains within a defined middle-income range relative to the income level of a benchmark high-income country, such as the United States, for a prolonged period of time. (Source: Glawe and Wagner, 2016)
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