Middle-income growth traps

Agénor, Pierre‐Richard; Canuto, Otaviano

doi:10.1016/j.rie.2015.04.003

Cited by 98 publications

(81 citation statements)

References 33 publications

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“…For simplicity, we assume that intermediate‐input producing firms last for only one period and that patents are auctioned off randomly (and at no cost) to a new group of firms in each period. Thus, each producer of a new intermediate good holds a patent only for the period during which it is bought, implying monopoly profits during that period only; yet patents last forever (See Agénor and Canuto ()). By arbitrage, therefore, the patent price

Q_{t}^{j}

Q_{t}^{j} = {normalΠ}_{t}^{j} . j = I, R

…”

Section: The Modelmentioning

confidence: 99%

Infrastructure and Industrial Development With Endogenous Skill Acquisition

Agénor

Alpaslan

2018

Bulletin of Econ Res

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The link between infrastructure and industrial development is studied in an OLG model with endogenous skill acquisition. Industrial development is defined as a shift from an imitation‐based, low‐skill economy to an innovation‐based, high‐skill economy, where ideas are produced domestically. Imitation generates knowledge spillovers, which enhance productivity in innovation. Changes in industrial structure are measured by the ratio of the variety of imitation‐ to innovation‐based intermediate goods. The model also distinguishes between basic infrastructure, which helps to promote learning by doing and productivity in imitation activities, and advanced infrastructure, which promotes knowledge networks and innovation. Numerical experiments, based on a parameterized version for a stylized low‐income country, show that changes in the level and composition of public investment in infrastructure may have significant effects on the structure of the labour force and the process of industrial development.

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Q_{t}^{j}

Q_{t}^{j} = {normalΠ}_{t}^{j} . j = I, R

…”

Section: The Modelmentioning

confidence: 99%

Infrastructure and Industrial Development With Endogenous Skill Acquisition

Agénor

Alpaslan

2018

Bulletin of Econ Res

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“…Agénor and Canuto () have emphasized, in the model with heterogenous abilities described earlier, the lack of access to advanced infrastructure as a cause of a middle‐income trap. To highlight the benefit of ICTs, they assume that advanced infrastructure serves to promote activity only in the design sector .…”

Section: Causes Of Middle‐income Trapsmentioning

confidence: 99%

Caught in the Middle? The Economics of Middle‐income Traps

Agénor

2016

Journal of Economic Surveys

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128

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This paper provides an overview of the recent analytical and empirical literature on middle‐income traps. The first part examines the descriptive and statistical evidence on these traps. The second discusses the various arguments that have been put forward to explain the existence, and persistence, of middle‐income traps. These arguments include diminishing returns to physical capital, exhaustion of cheap labor and imitation gains, insufficient quality of human capital, inadequate contract enforcement and intellectual property protection, distorted incentives and misallocation of talent, lack of access to advanced infrastructure, and lack of access to finance, especially in the form of venture capital. The third part considers public policies aimed at avoiding, and escaping from, middle‐income traps. The concluding part identifies a number of directions in which the empirical and theoretical literature could fruitfully evolve.

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“…Moreover, this approach carries the seeds of its own demise; assuming that there is a large pool of unskilled labor, once it is drawn into medium-skill sectors that are aided by technology, the pool of "surplus" labor shrinks rapidly, leading to excess demand, wage growth, and, inevitably, a loss of labor-cost competitiveness. Agénor and Canuto (2015) use an overlapping generations model that focuses on the composition of the labor force itself, showing that the same technological forces that drove the initial changes in an economy peter out, along with sustained growth. Modeling the choices of workers to enhance their own skill set, constrained by the availability of both basic and advanced infrastructure (such as broad-band access), the model finds that there are several scenarios where an economy can be caught in a low-growth equilibrium.…”

Section: A Brief Look At the Conceptmentioning

confidence: 99%

“…To set this in motion, a country must necessarily be open to trade to acquire the basic technologies. However, openness to trade only grows more important as a country develops; as diminishing returns to technology set in, Agénor and Canuto's (2015) overlapping generations model shows that a critical mass is required (but never reached) to draw highly-skilled workers into higher-skilled manufacturing. Openness to trade could provide this demand that is missing in the home country market, contributing to creating the critical mass to reorient a country's labor force towards higher skills (and, with it, provide sustainable technological growth).…”

Section: The Fundamentals Still Mattermentioning

confidence: 99%

Old wine and new bottles: A critical appraisal of the middle-income trap in BRICS countries

Hartwell¹

2018

RUJEC

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The idea of a middle-income trap is now over a decade old and continues to be applied to growth paths which have not been self-sustaining. With the bulk of emerging markets now approaching middle-income status, and given the reality of slower growth for many countries (and the policy recommendations that currently exist for overcoming this problem), is the middle-income trap still a relevant framework? Using reference to the BRICS countries, the key finding of this analysis is that the middle-income trap conceptualization is of little value-added, as fundamentals still matter, especially in relation to macroeconomic stability. Similarly, we note that "quality" institutions are necessary, both political and economic, including (smaller) size of government and property rights. The "trap" as currently formulated is thus nothing new or particularly relevant, as it repackages some familiar structural issues while avoiding other crucial ones.

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Middle-income growth traps

Cited by 98 publications

References 33 publications

Infrastructure and Industrial Development With Endogenous Skill Acquisition

Infrastructure and Industrial Development With Endogenous Skill Acquisition

Caught in the Middle? The Economics of Middle‐income Traps

Old wine and new bottles: A critical appraisal of the middle-income trap in BRICS countries

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