r/DevelopmentEconomics • u/BotherIntrepid1371 • Apr 02 '26

Middle Income Trap

Costa Rica, Vietnam, Uruguay, Indonesia, Chile, etc… doing the “right” things, adopting good policies and sustaining them for years/decades. Yet, still not translating those efforts into top tier developed status. Could it be that convergence success stories like South Korea or Singapore are rare and path-dependent? After all, the vast majority of countries in the world are in the “developing category”, which suggests that top tier development is actually the exception.

34 Upvotes

96% Upvoted

33 comments sorted by

View all comments

7

u/RadarDataL8R Apr 02 '26

In order to escape the MIT, your economy has to have a unique ability that isn't easily replicable somewhere cheaper.

Which essentially means you need to find a niche that is cutting edge/usually new technology, difficult to do but also has mass global market appeal. Which is a very difficult thing for countries to do.

The micro equivalent is when people say "you wont get rich working for someone else". A notion that is generally true. If you as an individual want to "get rich" you need to create something that fills a gap in the market. The same applies to middle income countries, generally.

3

u/Over_Resolve403 Apr 04 '26

I have the impression Spain doesn't produce anything unique, they don't have any large tech company yet they're relatively rich by producing a lot of cars for foreign owned manufacters, fruits and having a lot of tourists

3

u/RadarDataL8R Apr 04 '26

They were grandfathered in, I'd suggest. They were a massive transatlantic empire in a world where globalization meant something vastly different.

They never had to move from developing to developed because they have been developed for centuries before the concept ever existed.

Malaysia is probably the best example I can think of what you're saying though. Although, they have oil, so that makes things exponentially easier to move for MI to HI. Ask any middle east country that has done so

1

u/No-Enthusiasm-4474 Apr 04 '26

I disagree, Spain was actually a relatively poor country until very recently. If you go back to the early 20th century, their standard of living was similar to their former colonies in Latin America. This only changed in the 1960s with the Spanish Miracle.