Examining the economic growth and the middle-income trap from the perspective of the middle class |
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| Institution: | 1. Department of Management, Monash University, Caulfield Campus, Caulfield East 3145, Victoria, Australia;2. University of South Australia Business School, University of South Australia, City West Campus, Adelaide 5001, South Australia, Australia;3. Graduate School of Business and Law, RMIT University, Melbourne 3000, Victoria, Australia;1. School of Social Sciences, University of Manchester, United Kingdom;2. Centre for Growth and Business Cycle Research, United Kingdom;3. World Bank, United States;1. Southwest Jiaotong University, Chengdu 610031, China;2. CIBER at Georgia State University, Atlanta, GA, USA;3. University of Michigan-Flint, 2126 Riverfront Center West, Flint, MI 48502, USA;4. Southwest Petroleum University, Chengdu 610500, China;5. Southwestern University of Finance and Economics, Chengdu 610074, China;1. UNU-MERIT and UNIDO, Wagramerstrasse 5, Vienna 1220, Austria;2. UNU-MERIT, Boschstraat 24, Maastricht 6211 AX, The Netherlands |
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| Abstract: | In recent decades, while some countries have been growing consistently, others were not able to keep high growth rates and got stuck in the “middle-income trap.” This study aims to explore the relationship between the middle class and the persistence of economic growth, and understand the role of the middle class in avoiding the middle-income trap which is a serious threat for many emerging markets, yet an understudied topic in the academic literature. Our findings suggest that the key growth factors including the middle class, innovation, productivity, and foreign direct investment have diminishing marginal effect on economic growth. Moreover, the middle class plays an important role in avoiding the middle-income trap. We also find regional differences in the middle-class growth and economic evolution of emerging markets over time. To our knowledge, this is the first study examining the relationships between the middle class, economic growth, and the middle-income trap. |
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| Keywords: | Catch-up index Economic growth Emerging markets Foreign direct investment Innovation Middle class Middle-income trap Productivity |
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