Overcoming the middle-income trap and achieving sustainable development
In collaboration with Economic Commission for Africa (ECA)
The middle-income trap is an economic development situation in which a country’s income and economic output growth stagnate once the country is classified as a middle-income nation. This research paper explores how African nations can escape the so-called middle income trap.
Escaping the middle-income trap will require a holistic policy approach to ensure not only that economies expand at an adequate and consistent pace, but also that the necessary structural shift takes place. Capitalizing on global efforts to mitigate climate change has the potential to catapult African economies on stronger development trajectories. Investment in clean energy infrastructure and the resulting expansion in access to electricity will be critical to support Africa’s industrialization efforts and, consequently, play a central role in pushing African countries towards high-income status.
Technological advancements, financial innovations and global efforts towards climate change mitigation have changed the context in which middle-income countries pursue high-income status. Government institutions and public policy will have to play a central role in navigating and indeed capitalizing on this new context. The establishment of governing instruments devoted to a modern industrial strategy and making the transition to green, digital, circular and blue economies will enable African countries to implement high-level institutional and coordination mechanisms that will enhance their intersectoral developmental agendas.
