GRANT FROM CARLSBERGFONDET

GRANT FROM CARLSBERGFONDET

Paul Duo Deng has just been awarded DKK 1.060 million from the Carlsbergfondet for a research project on the Middle Income Trap. Way to go, Paul!

The project is described in the following way: This research aims to tackle an intriguing question in economic growth that has been neglected in research so far - why did some fast growing developing economies suddenly fall into middle income trap, and get stuck for decades? Before I elaborate further, a definition of middle income trap is warranted. To be called a middle income trap (MIT hereafter), two criteria have to be satisfied. First, before entering a trap, a country’s income per capita should roughly fall between $4,000 - $12,000, the common definition of middle income. Second, to differentiate the trap from a slowdown, not only a country’s growth rate has to be very slow, which clearly deviates from its recent growth trajectory, but the slow growth must last very long, say, more than 10 years. Are such traps uncommon in the history of economic growth? The answer is clearly no. My initial investigation into the subject revealed that there had been nearly 50 episodes of MITs during 1950-2009, and the average duration of the trap was 10.3 years.