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India has a nearly 34-year window of opportunity to leverage its human resources and realize its growth potential before a phase of demographic burden sets in. This period will coincide with another important part of India’s growth story: the pursuit of high-income status. Too many countries have failed to make the leap from the middle-income to high-income group, afflicted by a malady now commonly referred to as ‘the middle-income trap’.
What is the middle-income trap?
What is the basis for the categorization of countries?
World Bank has used the 2018 data of gross national income (GNI) per capita to categorize countries into the following four categories:
Real Per-Capita Income* (2016)
Low-Income Countries (LICs)
Less than 5% of the US.
Lower Middle-Income Countries (LMICs)
About 5-15% of the US
Upper Middle-Income Countries (UMICs)
About 15-35% of the US.
High-Income Countries (HICs)
All those above that line – including some above US’ level.
Why do Countries fall into the Middle Income Trap?
Why India might get caught in a middle-income trap?
(1) Backlash against globalization:
(2) Thwarted Structural Transformation:
(3) Human Capital Regression:
(4) Climate change-induced Agricultural Stress:
Avoiding the Middle Income Trap
(1) Transitioning from diversification to specialization in production:
(2) Shifting to productivity-led growth:
(3) Opportunities for professional talent:
(4) Addressing barriers to effective competition:
(5) Decentralized economic management:
(6) Sustaining macroeconomic stability:
(7) Changing orientation of social programs:
By: VISHAL GOYAL ProfileResourcesReport error
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