The latest analysis by the World Bank brings to the fore the challenges of over 100 nations, including India, in the pursuit of high-income status. India is one of the more than 100 countries that will face "significant challenges" in the coming decades as they vie to become high-income nations, the World Bank report said. The report titled 'World Development Report 2024: The Middle-Income Trap' indicated that India may take up to 75 years to attain just a quarter of the United States' per capita income. According to a PTI report, this report further suggests that China could take more than a decade to move toward this milestone, while Indonesia might require nearly 70 years.
The report mainly focuses on the 'middle-income trap,' where rising incomes reduce economic growth, thus hardening getting out of middle-income brackets and advancing towards high income. Economies, according to the report, get stuck at the level of per capita income equivalent to 11% of that of the U.S. and cannot move forward beyond those middle-income brackets. Only 34 of the world's middle-income countries, whose per capita incomes range between $1,136 and $13,845, have graduated to higher-income status during the past 34 years.
The report describes several strategies for escaping the middle-income trap, based on the experiences of countries that have successfully made this leap. Central to this is the "3i" framework: investment, the infusion of global technologies, and fostering domestic innovation. Achieving these goals requires agile, adaptable state policies. However, the modern global economy presents significant challenges, and India faces substantial headwinds as it strives to avoid this trap. While the existence of this trap is still debated, the 2024 report provides a fresh perspective and new strategies for breaking free from it.
This story is from the November 2024 edition of Indian Economy & Market.
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This story is from the November 2024 edition of Indian Economy & Market.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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