Breaking Out Of the Middle-Income Trap
Assessing the Role of Structural Transformation
Ipek Ergin
Best Dissertation Prize MSc Development Studies (2015)
Abstract
This paper investigates whether lack of structural transformation can explain why countries fall in the middle-income trap. Expanding the analysis of Eichengreen, Park and Shin (2013), it performs a probit regression analysis of a panel of 137 countries from 1963 to 2010. The variables of interest are export diversification andmanufacturing export quality as proxies of structural transformation at the middleincome level. The paper empirically tests whether these two characteristics of the structural transformation can lower the likelihood of middle-income slowdowns. The findings show that diversifying the export composition can offer a way to escape the trap, while upgrading manufacturing goods is a fruitless strategy to avoid middleincome slowdowns.
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Structural Transformation
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Middle-Income Trap
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Export Diversification
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Manufacturing Export Quality
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