The evidence and mechanism of the middle income trap
University of New Brunswick
In recent years, the term “middle-income trap” has increasingly been discussed in the publications on development policy. The term itself often has not been precisely defined in the literature. In this report, I will discuss the existence of middle income trap, its policy implications, and its statistical significance. The middle income trap is empirically tested by Generalized method of moments (GMM) estimation method. The results show that there are differences in economic development pace of countries in different income groups. Middle income countries need to formulate further actions to evolve to higher income groups.