The World Bank has released its World Development Report 2024, sounding the alarm for middle-income countries at risk of falling into the “middle-income trap.” Despite significant strides in poverty reduction, only a small fraction of middle-income nations have successfully transitioned to high-income status.
The report emphasizes the need for these countries to undergo a dual transformation
First, they must shift from an investment-led growth model to one that embraces technology infusion. Second, they need to foster innovation to sustain long-term progress.
The World Bank outlines tailored strategies for different income levels. Low-income countries should prioritize improving their investment climates, while lower-middle-income economies need to integrate global technologies and stimulate business competition.
Upper-middle-income countries are encouraged to focus on innovation, strengthen their capital markets, and protect intellectual property rights.
The report calls upon governments to foster economic freedom, reform institutions, and seize opportunities during times of crisis to implement necessary policy reforms.
These transitions, the World Bank concludes, are crucial for middle-income countries aspiring to achieve high-income status in the decades to come.
