Basic idea of what leads to the middle income trap - a theorized economic development situation in which a country’s growth slows after reaching middle income levels, and how innovation could help affected countries escape.

1. 1Hadi Zamri, 22 Nov 2017

2. LESS?
Introduction

3. LESS?
Most likely because the work they are doing are considered to be
LESS VALUABLE compared to other jobs at THAT TIME.
Introduction

4. country’s growth slows
unattainable
Trap
• Lost their competitive edge
high-value-added goods
stuck in the
middle income range
4

5. Institutions may not support an
adaptive & creative
economy & society
Transition from manufacturing-
driven growth, possible failure to
invest in human capital,
slowdown in business innovation
Margins enjoyed through cheap
labour no longer possible,
competition from other
developing countries
5
Why is this
happening?
Source: Geoff Riley, The Middle Income Trap, website: https://www.slideshare.net/tutor2u/middle-income-trap-62717792

6. Typical
Development
Stages
6
Urbanization,
high investment
returns, basic
manufacturing,
low wages
Manufacturing
diversification &
sophistication,
increasing
middle classes,
financial
deepening
Diversification,
sophistication,
complexity,
innovation,
welfare systems
Source: Geoff Riley, The Middle Income Trap, website: https://www.slideshare.net/tutor2u/middle-income-trap-62717792
GNI per capita of $1,025 or less • Lower Middle Income:
$1,026 - $4,035 GNI per capita
• Upper Middle Income:
$4,036 - $12,475GNI per capita
GNI per capita of $12,476 or more
Bangladesh, Pakistan, Vietnam, India,
Philippines, Indonesia, etc.
China, Thailand, Malaysia, etc. Germany, UK, Spain, Australia,
Korea, Japan, Taiwan,
Hong Kong, Singapore, etc.
High income country list: https://en.wikipedia.org/wiki/World_Bank_high-income_economy
Low Income Middle Income High Income

7. 7 7
There is no one solution for all,
as all countries are very different
However, one common criteria
that cuts across:

8. How are they doing in comparison with a
developed country with EU’s largest
innovation system?
8
Science & Innovation
Source: OECD, https://www.oecd.org/sti/outlook/e-outlook/sticountryprofiles/germany.htm

9. 9
How much have they grown compared to
the rest of the world?
Science & Innovation
Source: WDR 2017 team, using data from Penn World Table, version 8.1 (Feenstra, Inklaar,
and Timmer 2015)

10. Innovation is at the heart of development
Inspire the hearts of the young,
and they will continue to change the world
Policy makers, the education system
& everyone must have innovation in
mind to get better results
10

11. —STEVE JOBS
11
—POPULAR BUSINESS INNOVATION QUOTE

12. —SUKANT RATNAKAR
12
—ALBERT EINSTEIN

13. THANK YOU