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The Middle Income Trap: More Politics than Economics


November 20, 2015
3:15pm - 5:00pm
Hoffmann Room, Busch Hall
November 20, 2015
3:15pm - 5:00pm
Hoffmann Room, Busch Hall

Economists have identified the existence of a middle income trap but have yet to analyze, much less theorize, the politics of this trap. We argue that the trap has two core components. First, the policies necessary to upgrade productivity -- as in human capital and innovation -- require enormous investment in institutional capacity. Second, these institutional challenges come just at the time when political capacity for building these institutions is weak due primarily to the fragmentation of potential support coalitions. Politics in particular are stalled by fractured social groups, especially business and labor, and inequality generally. These conditions resulted in large measure from previous trajectories of growth. The empirical analysis concentrates on nine larger MI countries.
*Please note: There will be no presentation at this seminar. Attendees are expected to read a paper and be prepared to enter into a discussion. The paper can be downloaded below.

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