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The High Income Trap

The Emerging View

18 June 2014

The High Income Trap. Emerging Markets (EM) now account for more than 50% of global GDP and there are nearly three times as many EM countries as developed economies in the world. EM has achieved impressive convergence with richer countries over the past 25 years. Still, what is all that wonderful progress worth if the convergence is unsustainable? Did EM countries advance by cyclical rather than structural means? Or are EM countries about to crash into the so-called Middle Income Trap, the notion that countries face growth challenges as they approach higher income status?

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