China, India, Brazil and South Africa are among 108 countries that face serious challenges that could impede their transition to high-income economies in the coming decades , according to a new World Bank study .
Since 1990, only 34 middle-income economies have managed to rise to high-income status, many of them driven by factors such as joining the European Union or the discovery of natural resources.
The study, titled “World Development Report 2024 ,” offers a comprehensive roadmap for developing countries to escape the so-called “middle-income trap.”
Furthermore, the document reveals that when countries reach an annual gross domestic product (GDP) per capita of approximately eight thousand dollars (equivalent to 10% of the GDP per capita of the United States), they tend to stagnate in their economic growth.
Indermit Gill, chief economist and senior vice president for development economics at the World Bank Group, said, “The battle for global economic prosperity will largely be won or lost in middle-income countries. But too many of these countries are resorting to outdated strategies to become advanced economies.”
Given this situation, the World Bank proposes a “3i strategy” for countries to achieve high-income status, which includes three phases: investment, incorporation and innovation.
Thus, low-income countries should initially focus on increasing investment (phase 1i) . Once they reach the lower middle income level, they must adopt technologies from abroad (phase 2i) . Finally, upon reaching the upper middle income level, they should focus on innovation (phase 3i) .
For his part, Somik V. Lall, director of the team in charge of preparing the report, said that “the road ahead is not going to be easy, but it is possible for countries to make progress even under the current difficult conditions. Success will depend on how you balance the forces of creation, preservation and destruction.”
The report highlights South Korea as a successful example in implementing the 3i strategy.
Likewise, the report highlights that other countries such as Poland and Chile have also followed similar paths , focusing on increasing productivity and incorporating foreign technology to boost internal innovation.
The report concludes that although the path to economic prosperity is challenging, with the implementation of appropriate policies and a strategic approach, middle-income countries can overcome obstacles and achieve sustainable and equitable growth.
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