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Progress stalled in 108 developing countries by 'middle-income trap

|Comments and Research
08 August 2024

photo by NOAA on UnsplashA recent report from the World Bank has raised alarm bells regarding the economic futures of over 100 developing countries, warning that they risk becoming ensnared in what is termed the “middle-income trap.” This phenomenon occurs when nations reach a certain level of income but struggle to transition to high-income status, thereby stalling their economic growth and development.

Understanding the Middle-Income Trap

The World Development Report 2024: The Middle Income Trap identifies that countries typically become trapped when their GDP per capita reaches about 10% of the annual U.S. GDP per person, which is approximately $8,000 today. This threshold marks the distinction between middle-income and high-income economies. Since 1990, only 34 middle-income countries have successfully transitioned to high-income status, with many of those benefiting from unique circumstances, such as European Union integration or resource windfalls like oil discoveries.

As of the end of 2023, 108 countries were classified as middle-income, home to approximately 6 billion people, or 75% of

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