New Delhi: The World Bank said India might take 75 years to attain even one-fourth of the US’ per capita income, according to the multilateral lender’s ‘World Development Report 2024: The Middle Income Trap’. To be sure, China will take over 10 years to match one-fourth of the US’ per capita income. According to the report, Indonesia will match the benchmark faster than India, in 70 years.
The middle-income trap
The World Bank report stated that 108 countries were placed in the middle-income category by end-2023 with an annual per capita GDP of $1,136-13,845. These countries make up 75 per cent of the world’s population with 6 billion people. Nearly 2 out of 3 people in these countries live in extreme poverty, according to the report.
What is the “middle-income trap” and how can countries escape it?
The World Development Report outlines a comprehensive roadmap to help developing economies achieve high-income status.
➡️https://t.co/HmIuNgkW6K #WDR2024 pic.twitter.com/BSMyQghl4R
— World Bank (@WorldBank) August 2, 2024
The World Bank detailed the middle-income trap in which a country’s per capita income is locked at 10 per cent of GDP per capita, around $8,000. This happens when countries turn wealthier, the report stated. The $8,000 mark is in the middle of the middle-income range determined by World Bank.
New problems, old solutions
The World Bank stated that many of these middle-income countries face an array of hurdles going forward. These include:
Rapid aging
Rising debt
Tensions related to geopolitics and trade
Growth-environmental safety runoff
However, these countries continue to deploy solutions from the previous century to expand investment, said the report. It likened this to driving a car in first gear while seeking faster speed.
Blueprint for growth
Indermeet Gill, chief economist at the World Bank, said middle-income countries will face a make-or-break situation when it comes to the battle for global economic prosperity. These countries require a fresh approach to capital raising to meet the challenges of demography, ecology and geopolitics, said Gill.
The battle for global economic prosperity will largely be won or lost in middle-income countries. Learn the 3 i strategy of investment, infusion, & innovation to achieve growth in the latest World Development Report. ➡️https://t.co/aYOD4UsBIu #WDR2024 pic.twitter.com/nfgNgeTsyA
— World Bank (@WorldBank) August 1, 2024
To elaborate on the challenge, Gill highlighted that just 34 countries had shifted to high-income status from middle-income status since 1990 either by integration with the 27-nation EU bloc or via the discovery of oil reserves.
The World Bank in its analysis of middle-income countries stated that India will take 75 years to reach one-fourth of the US’ per capita GDP figures. Here’s why Economy Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
