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The Middle-Income Trap: More Politics than Economics

  • Richard F. Doner and Ben Ross Schneider


Economists have identified the existence of a middle-income (MI) trap but have yet to analyze the politics of this trap. The authors argue that countries in the MI trap face two major institutional and political challenges. First, the policies necessary to upgrade productivity—as in human capital and innovation—require enormous investment in institutional capacity. Second, these institutional challenges come at a time when political capacity for building these institutions is weak, due primarily to the fragmentation of potential support coalitions. Politics are stalled in particular by fractured social groups, especially business and labor, and more generally by inequality. These conditions result in large measure from previous trajectories of growth. The empirical analysis concentrates on nine of the larger MI countries.



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* We are grateful to Elvin Ong and Tugba Bozcaga for research assistance and, for comments on previous versions, to Carlos Elizondo, Gustavo Flores-Macías, Alberto Fuentes, Stephan Haggard, Peter Hall, Eric Hershberg, Kevin Hewison, Alisha Holland, Francis Hutchinson, Erik Kuhonta, Tomas Larsson, Antoine Maillet, Gerald McDermott, Marcos José Mendes, Darius Ornston, Işık Özel, Eva Paus, Ansil Ramsay, Tom Remington, Peter Wad, Shahid Yusuf, and participants at seminars at Bilkent University, Copenhagen Business School, Harvard University, Instituts d’études politiques, LSE, Sabanci University, University of Bremen, University of Flensburg, and University of Frankfurt. Schneider thanks the Hanse-Wissenschaftskolleg for fellowship support.

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Doner and Schneider supplementary material
Doner and Schneider supplementary material 2

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Supplementary materials

Doner and Schneider supplementary material
Doner and Schneider supplementary material 1

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