Middle income trap

From Simple English Wikipedia, the free encyclopedia

In economics the middle income trap happens when a country's GDP is stuck at some level and cannot increase.[1]

The World Bank says that South Africa and Brazil have fell into the trap.[1][2]

Economists think this happens because as a country sells more and gets richer, it pays higher wages. This increases the cost of selling stuff. So the countries lose their competitive advantage and get stuck, unable to sell more and get richer.

The World Bank says a country is in the 'middle-income range' if its gross national product per person stays between $1,000 to $12,000 (in 2011 prices).[1]

I don't want to fall into the trap[change | change source]

To avoid the trap, a country could find better ways to make goods and reduce the cost of making them. They could also find new people or countries to sell their goods to. An increasing middle class could also use their money to buy fancy stuff that helps further promote growth: this includes better education, better technology and infrastructure, studying science and technology to create more innovations.[3][4]

References[change | change source]

  1. 1.0 1.1 1.2 Graphic detail Charts, maps and infographics (2011-12-22). "Asias Middle Income Trap". Economist.com. Retrieved 2014-08-11.
  2. "Indonesia risks falling into the Middle Income trap". Adb.org. 2012-03-27. Archived from the original on 2014-07-30. Retrieved 2014-08-11.
  3. "Seminar on Asia 2050". Adb.org. 2011-10-18. Retrieved 2014-08-11.
  4. "Asia 2050: Realizing the Asian Century". Adb.org. 2013-05-09. Retrieved 2014-08-11.