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How are countries in the middle income trap going to escape it?

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Questa volta abbiamo cercato: How are countries in the middle income trap going to escape it?

Ed ecco le risposte:

They’re not.*

  • more often than not, anyway.

Countries in the Middle income trap are usually beholden to other, richer countries to have gotten to that economic development level in the first place– both the good and the bad. Many middle income countries in Europe got buoyed up by the EU monetary redistribution and struggle as the exportation of goods gets shuffled around as well (there was a reason that until the mid 00s Germany was the first or second greatest exporter of goods in the world). These countries often don’t have enough capital to make sizeable changes in how much they pay their citizens, and low wages persist for decades, causing “brain drain” and other problems (Poland massively economically developed since the fall of communism but wages did not increase correspondingly)

Huge countries like Brazil and South Africa have entrenched political issues that prevent large sweeping quality of life changes that would COST the economy a great deal, and many of these countries are struggling to not fall behind because there is nowadays a huge reliance on the GLOBAL economy (the US dollar is king, still, so when times are good and it goes up…).

Basically, there’s very little wiggle room to increase the general income level of a country because when times are bad, middle income countries are trying to stay afloat with the development costs, etc. And when times are good, they’re trying to stay abridge of the development and high global cost.

Oh and many of these countries are crushingly in debt to institutions and countries that will not have their payments denied

The trap is happening because of a shortage of a labor. Wages can rise only if labor becomes more valuable and scarce. Bringing in more people from other poorer increase the supply of labor and prevent wages from getting too high. As an added benefit, the immigrants will live a better life than in their home country. It’s a win-win for everyone.