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Middle-Income Trap - Coggle Diagram
Middle-Income Trap
Meaning
Low-income countries with cheap labour and access to ready-made technology
They grew faster and become wealthy
Categorization of countries
Lower middle-income:
Those with GNI per capita from $1,026 to $3,995
Upper middle-income:
Countries with GNI Per capita between $3,995 and $12,375
Low income:
Countries with GNI per capita is up to $1,025
High income:
Per capita income above $12,375
World Bank used 2018 data of gross national income (GNI) per capita:
Why India might get caught into middle income trap?
Human capital regression due to skill gap
Climate change-induced Agricultural Stress
Thwarted structural transformation and premature de-industrialization
Fall in private consumption
Backlash against globalization
How can India avoid the middle-income trap ?
Technology intensive manufacturing
Increased R&D spending
Strengthen manufacturing sector
Improve productivity
Re-allocation of labour from low-productivity agriculture to high-productivity sectors
Steps to improve
Greater incentives for R&D investments
Tax exemptions
Local value addition through Production-linked incentive scheme
Conclusion
Timely intervention to improve productivity
No further delay