Late industrialisation, urbanisation and the middle-income trap: an analytical approach and the case of Vietnam

Abstract

This article proposes and illustrates an analytical approach to understanding the relationship between urbanisation and the middle-income trap. The analytical approach is based on the view that in order to understand the nature of the middle-income trap, it is necessary to understand the development process and policy ingredients of countries that have successfully made the transition from low-income to high-income countries without getting stuck in the middle. Alice Amsden’s work is an essential source for this task. She does not, as far as I am aware, use the term “middle-income trap”, and apart from Amsden (1991), she largely ignores the urban question. Yet her work contains important insights that illuminate the nature of the middle-income trap. Focusing on Vietnam, the first part of the article identifies these insights and extends them to propose an analytical approach, whilst the second part describes the speed, distribution and form of urbanisation in Vietnam and applies the analytical approach to discuss ways in which the process of urbanisation is contributing to the country falling into, or avoiding, the trap.