Growth Slowdowns and the Middle-Income Trap

Aiyar, Shekhar; Akcigit, Ufuk; Puy, Damien; Wu, Yiqun; Zhang, Longmei

doi:10.2139/ssrn.2247223

Cited by 34 publications

(32 citation statements)

References 20 publications

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“…Our findings have important policy implications for developing and emerging economies that are evolving upward on the development ladder but are faced with increasing suspicion on whether their convergence is slowing down (Eichengreen, Park and Shin, 2013; Aiyar et al , 2013). On the one hand, results of our paper regarding the detrimental impact of corruption on bank soundness justify the urgency of the anti-corruption campaigns in these countries, particularly for banking sector.…”

Section: Discussionmentioning

confidence: 88%

Impact of corruption on bank soundness: the moderating impact of Shari’ah supervision

Khan

Fraz

Hassan

et al. 2021

JFC

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Purpose This study aims to examine whether the soundness of Islamic banks is differently affected by corruption compared to conventional counterparts. Moreover, the Shari’ah supervisory board (SSB), as a cornerstone of Islamic banking and representing a multi-layer corporate governance model, is expected to moderate the influence of corruption on soundness for Islamic banks. Design/methodology/approach This study considers a unique sample of 1,528 observations on 71 Islamic banks and 120 conventional banks operating in 11 emerging and developing Muslim countries over the 2010–2017 period. This study uses generalized least squares regression model and the coefficients are estimated by using random-effects estimator. In addition, to overcome a potential endogeneity concern for corruption and bank stability relationship, this study uses Two-Stage Least Squares regression instrumental variable estimator. Findings The authors find consistent evidence that higher levels of corruption adversely impact the soundness for conventional banks, in favor of the sand the wheel hypothesis in the corruption–development nexus. However, as expected, this study finds a less negative impact of corruption on soundness of Islamic banks. Moreover, SSB moderates the relationship between corruption and soundness of Islamic banks. The findings are robust to a battery of alternative checks. Research limitations/implications Findings of the paper regarding the detrimental impact of corruption on bank soundness justify the urgency of the anti-corruption campaigns in these countries, particularly for conventional banks. Moreover, the findings provide support for the positive contribution of SSBs to overcome the adverse effect of corruption on soundness of Islamic banks and thereby underscoring the need for enforcement and regulatory mechanism for SSBs to be more effective. Originality/value To the best of the authors’ knowledge, this is the first study to examine the moderating impact of Shari’ah supervision on the relationship between corruption and soundness of Islamic banks.

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Section: Discussionmentioning

confidence: 88%

Impact of corruption on bank soundness: the moderating impact of Shari’ah supervision

Khan

Fraz

Hassan

et al. 2021

JFC

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“…Griffith (2011, p. 39) suggests that the implied causes of a given country’s falling in the so‐called middle‐income trap are associated with the adverse effect of increased wages related with the first transition of the given country from a low‐income to the middle‐income level of economic development, which process causes a cost increase in production and therefore a decline in competitiveness, that prevents the given country from successfully achieving the second transition from the middle‐income to a high‐income level of development. This phenomenon concerns therefore rapidly growing economies stagnating at the middle‐income levels and failing to graduate into the rank of high‐income countries (Aiyar et al ., 2013, p. 3). In some other formulation this is caused by the inability of the given country to structurally upgrade from low‐value‐added to high‐value‐added products (Lin and Treichel, 2012, pp.…”

Section: Literature Overview and The Possible Role Of Klems Accountingmentioning

confidence: 99%

Evidence for Middle‐Income Trap Non‐occurrence in the Light of KLEMS Growth Accounting for Poland☆

Kotlewski

Błażej²

2022

Review of Income and Wealth

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There is an ongoing discussion that many middle-income countries are on the brink of the so-called Middle-income Trap, if not already stuck in it. The case of the Polish economy is analyzed, as an example of a Central-Eastern Europe economy, to solve whether this is actually happening. Thanks to KLEMS growth accounting datasets published by Statistics Poland an analysis on this issue became feasible, showing that for Poland the assertion of the middle-income trap threat has to be rejected after observing the growth distribution between industries, and particularly their growth decompositions into factor and MFP contributions. Extending this research to some other countries may possibly confirm that, just as for Poland, this "trap" is not taking place (or the converse). Although not solving the theoretical nexus on the middle-income trap notion, these findings can be interesting for Central-Eastern Europe economies' researchers and the possible ongoing discussion.

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“…It stresses the need to progress on the technological scale in preventing a temporal decline. Aiyar employs a related method, although their hypothetical for evaluating a slower growth differs from Eichengreen's (Aiyar, 2013). The predictions of a Solow growth model are used by Aiyar et al…”

Section: Empirical Reviewmentioning

confidence: 99%

Escaping The Middle Income Trap: Challenges to be Confronted by Asian Economies

Paudel

2022

QJMSS

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Background: Several developing nations that effectively moved from low to middle-income status are subsequently caught within the middle-income trap because of the recurring economic expansion. In this situation, what should policymakers do? Objective: The article attempted to examine the essential factors that can substantially influence Asian nations' ability to avoid sinking into the middle-income trap. Finally, the research looked at factors that help Asia's high-income countries stop getting into this trap as their economies develop. Method: The paper examines the elements that are crucial for Asian economies and should deter them from slipping towards the middle-income trap using qualitative as well as quantitative methods. The analysis section consists of two sections: a descriptive analysis of the time patterns of different variables based on nineteen Asian economies from 1990 to 2014, and empirical research using panel regression and a panel probit regression analysis using the countries' income status as a binary variable to devise a possible policy recommendation. Result: According to studies, technological improvements, infrastructure development, and the demographic dividend are far more essential variables for overcoming the middle-income trap are technical improvements, infrastructure development, as well as the demographic dividend. Furthermore, governments in this area should implement optimal macroeconomic policies in order to promote growth without compromising economic stability. Conclusion: This study concludes that three main emphasis points should be examined when the middle-income trap needs to get addressed in the Asian region's high-income nations' growth path. They are appropriate R&D investments indicating technical advancement in research and innovation, development and realization of "soft" and "hard" infrastructure, and optimal use of the demographic dividend.

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Growth Slowdowns and the Middle-Income Trap

Cited by 34 publications

References 20 publications

Impact of corruption on bank soundness: the moderating impact of Shari’ah supervision

Impact of corruption on bank soundness: the moderating impact of Shari’ah supervision

Evidence for Middle‐Income Trap Non‐occurrence in the Light of KLEMS Growth Accounting for Poland☆

Escaping The Middle Income Trap: Challenges to be Confronted by Asian Economies

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