A World Bank report stated that India is among over 100 countries that will face “serious obstacles” in the next few decades to become high-income countries. The report also stated that India could take as many as 75 years to attain one-quarter of the United States income per capita.
On the other hand, China will take over 10 years to reach the same stage, while Indonesia may need nearly 70 years, as stated in the World Development Report 2024: The Middle Income Trap.
The report examines the economic progress of the past 50 years and finds that countries typically encounter a “trap” when their annual GDP per capita reaches about 10 per cent of the US level, equivalent to $8,000 today. This range places them among the World Bank’s middle-income countries. As of the end of 2023, 108 countries are classified as middle-income, with annual GDP per capita between $1,136 and $13,845. Representing 75 per cent of the global population, these nations are home to six billion people, and include two out of every three people living in extreme poverty.
The future poses even greater challenges, such as rapidly ageing populations, increasing debt, geopolitical and trade tensions, and the difficulty of advancing economically without harming the environment.
“Yet many middle-income countries still use a playbook from the last century, relying mainly on policies designed to expand investment. That is like driving a car just in first gear and trying to make it go faster,” the report said.
Without updating their strategies, most developing countries will struggle to build prosperous societies by mid-century, said Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics.
Gill emphasised that the battle for global economic prosperity will largely be won or lost in middle-income countries. The report suggests a strategy for achieving high-income status that involves adopting a sequenced and increasingly sophisticated mix of policies based on their development stage.
Since 1990, only 34 middle-income economies have transitioned to high-income status. More than a third of these were either integrated into the European Union or benefited from newly discovered oil reserves, the World Bank reported.
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