How to escape the middle income trap in Iran? Lessons from Malaysia, Thailand, South Korea and China

Authors

1 Associate Professor, faculty of economics, Institute of Humanities and Cultural Studies, Tehran, Iran

2 MA in economics, Institute of Humanities and Cultural Studies, faculty of economics, Tehran, Iran

10.22108/ies.2020.117359.1069

Abstract

In 2010, the World Bank categorized countries in terms of per capita GDP in terms of ppp (at constant 1990 prices) in three categories: low, middle (low and high), and high.
If a country trapped at least 28 years in low middle income and at least 14 years in high middle income group, then trapped in low and middle income group, respectively.
In this paper, using the experience of successful countries in avoiding the trap, we investigated the impact of investment, human capital, high-tech exports, total factor productivity, exports of goods and services, and the value added of service sectors on per capita GDP growth during 1991-2014, using panel data.
Research findings indicate that in successful Asian countries, human capital and total factor productivity growth with positive and significant effect have the greatest effect on avoiding the trap, and then other factors have been positively and significantly influenced. In the case of Iran, human capital and the total factor productivity growth have a positive and significant effect on economic growth, but their impact has not been so great that help escaping Iran’s economy from middle income trap and has remained in the middle income trap over the past 58 years.
JEL Classification: J24, D24, E22, C33

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