The World Bank report highlighted that more than 100 countries, including India, face serious obstacles in becoming high-income countries in the next few decades.
The Middle Income Trap
Further adding that New Delhi may take nearly 75 years just to reach one-quarter of US income per capita.
This World Development Report 2024 highlighting it as The Middle Income Trap said that it will take China more than 10 years to reach one-quarter of US income per capita and Indonesia nearly 70 years.
The report finds that as countries grow wealthier, they usually hit a “trap” at about 10 percent of annual US GDP per person, considering the lessons of past 50 years.
Here, 10 percent of annual US GDP per person is equivalent to USD 8,000 today.
This represents the middle of the range of what the World Bank classifies as middle-income countries.
Earlier 108 countries were classified as middle-income, each with annual GDP per capita in the range of USD 1,136 to USD 13,845 by the end of 2023.
These countries hold a big number of population being home to six billion people – 75 percent of the global population.
Why Would This Happen?
It is worth noting here that two out of every three people here live in extreme poverty.
Further, this report highlighted that the road ahead has even stiffer challenges than those seen in the past with rapidly aging populations and burgeoning debt, fierce geopolitical and trade frictions, and the growing difficulty of speeding up economic progress without fouling the environment.
Adding, “Yet many middle-income countries still use a playbook from the last century, relying mainly on policies designed to expand investment. That is like driving a car just in first gear and trying to make it go faster.”
Chief Economist of the World Bank Group and Senior Vice President for Development Economics, Indermit Gill said, 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.
It appears that the battle for global economic prosperity will largely be won or lost in middle-income countries, Gill said.
