1. How can Asian economies avoid middle-income trap?
Consequences of getting stuck in a middle income trap
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Abstract
When we talk on the subject of economic development, we generally refer to the ongoing
discussion on Sustainable Development, which is primarily based on three pillars: economic
sustainability, social sustainability, and environmental sustainability (Hansmann, Mieg, &
Frischknecht, 2012). If any of these three pillars or aspects of sustainability are not achieved
in the course of economic growth, then it is highly probable that the growth is not leading the
economy towards a balanced sustainable path (Lehtonen, 2004). For example, social
sustainability comes from a far and justified distribution of wealth among the citizens of a
nation, and this distribution depends largely on the ecological setting of the nation. If in the
due course of economic growth rapid industrialization takes place, it will lead towards two
scenarios, namely destruction of forests and agricultural fields for industrial expansion, and
consequential rural to urban migration of unskilled farmers. As a result, urban infrastructure
will face a huge challenge in terms of creating jobs for the migrated populace, and a huge
fraction of the populace will continue to survive at a very low and non-competitive wage rate.
This will bring forth a gap in the income distribution among the labor force, which will in
turn result in social imbalance, and consequential harm in economic growth. Hence, this
growth cannot be considered as sustainable growth. However, the aspects of unsustainable
economic growth is today our matter of concern, as getting stuck in a middle income trap is a
consequence of such unsustainable economic growth.