WASHINGTON: More than 100 countries, including China, are at risk of entering a “middle-income trap” and failing to become wealthy nations, the World Bank said Thursday as it unveiled a “comprehensive roadmap” to reach high-income status.
In its 2024 World Development Report, the Bank said countries usually hit such a “trap” when they reach around 10 percent of annual US GDP per capita — roughly $8,000 today — which can prove tough to move past.
With more than 100 countries representing more than 75 percent of the world’s population currently classified as middle-income, tackling the issue will prove key for economic development in the decades ahead, the Bank added.
“The battle for global economic prosperity will largely be won or lost in middle-income countries,” World Bank Group chief economist Indermit Gill said in a statement, calling for a “fresh approach.”
“First focus on investment; then add an emphasis on infusion of new technologies from abroad; and, finally, adopt a three-pronged strategy that balances investment, infusion, and innovation,” he said.
“With growing demographic, ecological and geopolitical pressures, there is no room for error.”
The Bank pointed to South Korea as an example of a former developing country which used this strategy to successfully reach high-income status.
“If they stick with the old playbook, most developing countries will lose the race to create reasonably prosperous societies by the middle of this century,” Gill said in the World Development Report.
“The team that has written this report hopes to radically alter this arithmetic,” he added.
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