Abstract
Developing Asia has undergone a dramatic shift over the past 5 decades from a region of mainly low-income economies toward one that is largely middle income. Compared with world aggregate data, developing Asia now has a much greater proportion of middle-income economies. The region faces the challenge of sustaining rapid growth after graduating from low to middle income, and moving further to high income. Evidence shows that it takes longer for economies to move from upper-middle to high income than shifting from lower-middle to upper-middle income. Still, developing Asian economies were able to shift more quickly than the rest of the world, whether the transition is from lower-middle to upper-middle income or from upper-middle to high income. The experience of newly industrializing economies shows that innovation, human capital, and infrastructure all played a vital role in their quicker transformation from middle to high income.
Highlights
Long the fastest-growing region of the world, developing Asia’s economic growth slowed down noticeably since the global financial crisis of 2008–2009
Even the People’s Republic of China (PRC), which has become the world’s second biggest economy after decades of fast growth, saw its growth fall from 14.2% in 2007 to 6.9% in 2015
It is important to note that sustained rapid growth has transformed Asia from a largely low-income region to a largely middleincome region
Summary
Long the fastest-growing region of the world, developing Asia’s economic growth slowed down noticeably since the global financial crisis of 2008–2009. Internal factors are at play in the decline in the region’s growth In this context, it is important to note that sustained rapid growth has transformed Asia from a largely low-income region to a largely middleincome region. The concept of the middle-income trap crystalizes the notion that growing rapidly can become more difficult after a country moves up from low income to middle income. The government typically plays a more nuanced role in the economy since the private sector is more developed Another example is that productivity growth can no longer rely primarily on the low-hanging fruit of reallocating workers from low-productivity agriculture to higher-productivity manufacturing and services. The last section lays down some concrete policy options available for Asian economies to overcome the middle-income challenge
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
