A fresh report by the World Bank forecasts a grim outlook for developing nations in their quest to climb to high-income status in today’s environment due to a combination of high debt, ageing populations and growing protectionism in advanced economies.
Released over the weekend, the World Development Report 2024 titled: “The middle – income trap,” the global bank outlined how all developing economies could avoid the middle income trap.
“Depending on their stage of development, countries need to adopt a sequenced mand progressively more sophisticated mix of policies.
Low-income countries can focus solely on policies designed to increase investment, lower-middle-income countries must shift gears and expand the policy mix to 2i, investment + infusion; upper- middle -income countries need to shift gears yet again investent + infusion + innovation,” the report prescribed.
It noted that a handful of countries that have made speedy transitions from middle- to high-income status had done so by disciplining vested interests, building their talent pool, and modernizing policies and institutions.
The report suggested that today’s middle-income countries could do the same. The 2024 World Development Report identifies what developing economies can do to avoid the “middle-income trap.”
It suggested lower-middle-income countries must go beyond investment-driven strategies—they must also adopt modern technologies and successful business practices from abroad and infuse them across their economies.
Upper-middle-income countries need to accelerate the shift to innovation, by pushing the global frontiers of technology.
This requires reconfiguring economic structures governing enterprises, labor, and energy use—in ways that enable greater economic freedom, social mobility, and political contestability.