World Development Report 2024
This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in...
A decade ago, in “The Middle-Income Trap Turns Ten,” Brookings Institution econo-mist Homi Kharas and I reviewed the burgeoning literature that An East Asian Renaissance had inspired. We found that economists had yet to provide a reliable theory of growth
to help policy makers navigate the transition from middle- to high-income status. Some had attempted to develop models, but they were poor substitutes for a well-constructed growth framework on which policy makers could build effective development strategies.
Meanwhile, the ranks of middle-income countries continued to grow. Five years later, in “Growth Strategies to Avoid the Middle-Income Trap,” we proposed that Schumpeterian growth models emphasizing creative destruction and institutional change had the poten-
tial to provide the analytical foundations for a fuller understanding of middle-income economies. But to be useful they had to be made a lot more accessible to policy makers.