Indermit Gill on what China and India must do to join the rich club
Subscribe to enjoy similar stories. “TO GET RICH is glorious" is the maxim that inspired one of the most successful development strategies of the past 50 years. It’s an aspiration widely shared across developing countries—and for good reason.
When countries become wealthier, the results can be glorious. Living standards rise. Poverty recedes.
The propensity to pollute dwindles, as products and production methods improve. That’s why a growing number of developing countries are setting national deadlines to become developed economies: China by 2035, Vietnam by 2045, India by 2047. In the absence of a miracle, their chances of success are slim—because of a distinctive affliction that strikes countries as they climb the income ladder.
In the coming decades the fate of the world will depend on whether it can be cured. In their drive for wealth, few countries get anywhere near the top. Economic growth in developing countries tends to level off during the middle-income stage.
It’s what the World Bank calls “the middle-income trap". This idea has been disputed over the past decade or so. Yet the latest evidence is compelling: since 1970 the average per-person income of middle-income countries has never risen above 10% of the level in America.
Since 1990 only 34 economies have managed to move up from middle- to high-income status—and more than a third of those were beneficiaries of either integration into the European Union or previously undiscovered oil. The number of people living in these economies is less than 250m—roughly the population of Pakistan. Today middle-income countries (defined by the World Bank as having gross national income per person of between roughly $1,150 and $14,000) are home to about 6bn people and nearly
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