ADBI Working Paper Series
MIDDLE-INCOME TRAP: REVIEW
OF THE CONCEPTUAL FRAMEWORK
Kamil Pruchnik
and Jakub Zowczak
No. 760
July 2017
Asian Development Bank Institute
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Suggested citation:
Pruchnik, K. and J. Zowczak. 2017. Middle-Income Trap: Review of the Conceptual
Framework. ADBI Working Paper 760. Tokyo: Asian Development Bank Institute. Available:
https://adb/publications/middle-income-trap-mit-review-conceptual-framework
Please contact the authors for information about this paper.
Email: kamilpruchnik@gmail, jakub.zowczak@gmail
The authors would like to thank Agnieszka Stka-Gawrysiak, Brian Pinto, and Ismail
Radwan for their helpful comments. Special thanks to Pawe Ciemiński for his
contribution to Section 5. The paper has benefited from discussion at the Asian
Development Bank Institute and China and World Economy international conference
“Middle-Income Trap in Asia and the People’s Republic of China’s New Economic
Normal.” Here, we would also like to specially thank Wang Xiaolu for his review at the
conference. Furthermore, the paper benefited from discussion at a seminar in the
Department of International Comparative Studies at the Warsaw School of Economics
and a seminar at the Economic Institute at the National Bank of Poland.
Kamil Pruchnik (corresponding author) is a head of research project at the Warsaw
School of Economics. Jakub Zowczak is an MA (Hons) economics with finance student
at the University of Edinburgh.
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ADBI Working Paper 760 Pruchnik and Zowczak
Abstract
The aim of this study is to develop a conceptual framework for the middle-income trap (MIT).
Firstly, we present an extensive literature review of what the MIT concept is, why economies
become ‘stuck’ in the MIT, and how the idea is criticized. Secondly, we put together a list of
countries stuck in the MIT according to different definitions. We contribute to the literature
by concluding that there are significant inconsistencies among the prevailing definitions of
the MIT. In particular, 60.2% of all countries have been classified as stuck in the trap by at
least one definition, as compared to 48.4% of all countries being currently classified as
middle-income by the World Bank. Furthermore, at least 36.0% of all countries have been
simultaneously classified as stuck in the trap by some definitions and as escapees by others.
Thirdly, we propose a framework for assessing exposure to the MIT based on the following
factors: i) unfavorable demographics, ii) low level of economic diversification, iii) inefficient
financial market, iv) insufficiently advanced infrastructure, v) low level of innovation, vi) weak
institutions, vii) inefficient labor market. Finally, as the analysis of the MIT definitions delivers
mixed results, we introduce a new concept, the convergence trap.
Keywords: middle-income trap, innovation
JEL Classification: O47, O38, O33, O21, O11, 012, O19, N30
ADBI Working Paper 760 Pruchnik and Zowczak
Contents
1. INTRODUCTION ......... 1
2. THE ORIGINS OF THE MIT CONCEPT ......... 1
3. INTERPRETATIONS OF THE MIT CONCEPT IN THE LITERATURE ........... 3
4. CRITICISM OF THE MIT CONCEPT IN THE LITERATURE11
5. COMPARATIVE STUDY OF MIT DEFINITIONS ...... 12
6. OVERVIEW OF FACTORS CONTRIBUTING TO THE MIT.15
7. CONVERGENCE TRAP ........ 19
8. CONCLUSIONS ........ 22
REFERENCES ......... 23
APPENDIX .... 28
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